U.S.-Europe Trade War: Projected Losses Approach $10 Trillion as Tariffs Escalate

U.S. President Donald Trump maintains that import tariffs are instrumental in incentivizing foreign companies to relocate production to the United States, thereby creating jobs and bolstering the economy. However, the American Chamber of Commerce (ACC) in the European Union warns that this strategy of implementing trade barriers could have detrimental effects on transatlantic economic relations. Experts predict that the economic repercussions of the trade war initiated by Trump could approach nearly $10 trillion, impacting trade volume, investment flows, and corporate profits on both sides of the Atlantic.

According to a report from the ACC, tariffs pose a significant threat to commercial relations between the U.S. and Europe, which encompass the European Union and the United Kingdom, with a combined value exceeding $9.5 trillion. In 2024, bilateral trade in goods reached $1.3 trillion, while services trade surpassed $750 billion. However, the overall business conducted by American and European companies within each other’s markets far exceeds these figures. Sales from European subsidiaries in the U.S. amount to approximately $3.5 trillion, while American companies generate around $4 trillion in revenue within Europe. Analysts assert that the introduction of tariffs will not only disrupt direct trade but will also hinder investment activity and service exports, an area where the U.S. typically holds a competitive advantage.

The economic impact is already becoming evident. In March 2025, Trump announced a 25 percent tariff on steel and aluminum imports from Europe, prompting swift retaliation from the European Commission. President Ursula von der Leyen characterized the tariffs as “taxes that are harmful to businesses and consumers,” pledging to implement reciprocal measures. Reports indicate that the EU has prepared retaliatory tariffs on up to $20 billion worth of American goods, including agricultural products and machinery. This escalation follows Trump’s earlier tariffs on imports from Canada, Mexico, and China, which began in February 2025 and have contributed to rising global trade tensions.

Experts caution that the trade war may lead to long-term economic losses. A study conducted by the Boston Consulting Group and HSBC estimates that protectionist measures could cost the global economy $10 trillion by the end of 2025 due to a reduction in global imports. For the U.S., this translates to higher domestic prices and reduced export competitiveness, while Europe faces challenges for industries reliant on American demand. In light of these developments, German Chancellor Olaf Scholz has stated that the EU is prepared to defend its interests, emphasizing the need for reciprocal trade policies.