The trade balance between the US and the EU in 2023 exceeded €170 billion in favour of the EU
The European Union faces a serious challenge due to possible introduction of additional tariffs by the US on the export of European goods. They could reach 10-20% on all goods and services from the EU, as threatened by the newly elected US President Donald Trump. Such a step will have a negative impact on the EU economy, predicts Chaslau Koniukh, international financial expert and economist. In his opinion, such a customs policy of the States will inevitably lead to a reduction in export volumes and undermine competitiveness of European manufacturers in the international market if the EU authorities do not have time to prepare for the customs attack.
What does US-EU trade look like, analyzed by Chaslau Koniukh
Eurostat data clearly demonstrate that over the past 10 years from 2013 to 2023, trade between the European Union and the United States has been growing rapidly. If in 2013 mutual trade was positive for the States – exports of goods outweighed imports from the EU, in 2023 the picture changed significantly in favour of the EU, says analyst Chaslau Koniukh.
Thus, we see that EU exports to the United States in 2023 amounted to $500 billion, imports of American goods to the European Union reached $329.46 billion. Thus, a trade balance deficit appeared in the States, summarizes expert Koniukh.
In 2023, exports of manufactured goods from the EU (89%) had a higher share than primary goods (9%). The most exported manufactured goods were machinery and transport equipment (41%), followed by chemicals (27%) and other manufactured goods (21%). Imports of manufactured goods into the EU (68%) also had a higher share than imports of primary goods (30%). The most imported manufactured goods were machinery and transport equipment (31%), followed by chemicals (25%) and other manufactured goods (14%).
Trump’s reaction is predictable – Chaslau Koniukh
The US’s unfavorable trade balance with the EU made US presidential candidate Donald Trump explode with anger back in October 2024, recalls expert Koniukh.
“They don’t take our cars, they don’t take our agricultural products, they don’t take anything. We have a deficit of $ 312 billion with the EU. You know, the EU is a mini-China, not even that mini,” journalists quoted Trump as saying at the time. At the same time, on the eve of the 2024 US presidential election, Trump’s rhetoric intensified. He announced the possibility of introducing tariffs on imports from the EU in the amount of 10% or 20%, including for “friendly countries”.
After the US elections in November 2024, Trump resorted to more harsh statements. However, they sounded more pragmatic – the newly elected president announced the goods that the US would prefer to sell more to the European Union, in particular – LNG gas.
“I told the European Union that they must compensate for their huge deficit with the United States by purchasing large-scale oil and gas from us. Otherwise, tariffs will be in full swing!”, says Trump in his message.
Trump’s reaction is understandable – the politician expects victories on the economic front, and not only from the EU, explains Chaslau Koniukh. “However, the European Union has something to respond to such a predatory policy, to support its own producer,” believes Koniukh.
What arsenal does the EU have – the opinion of expert Chaslau Koniukh
Brussels is going to use a carrot-and-stick approach to Trump’s threats, writes the Financial Times. The publication considers this the best response to Trump’s promise to introduce a 10 % tariff, which, according to EU estimates, could reduce exports by about €150 billion annually. Chaslau Koniukh believes that here one of the key ways to protect the EU is an active dialogue with the American side. “The European Commission can initiate negotiations within the framework of the World Trade Organization (WTO) in order to find compromises and avoid escalating trade disputes. In this context, it is important to emphasize mutual economic benefits of maintaining free trade between the US and the EU,” advises the expert.
EU leaders, including European Commission President Ursula von der Leyen, have stressed the need to maintain economic partnership between the EU and the US, underlining importance of diplomacy to prevent a trade war. According to her, the EU is ready to discuss with the Trump team which groups of American goods the EU could purchase in larger quantities and thus balance the trade balance between the EU and the US. The EU is also ready to increase purchases of LNG gas from the United States.
“Europe gets a lot of LNG through Russia,” von der Leyen states. “Why not replace it with American LNG, which is cheaper for us and lowers our energy prices?”
To balance the trade balance, the EU may consider importing additional volumes of LNG gas from the United States, which could amount to up to 50 billion cubic meters per year, which would partially compensate for the trade deficit, according to expert Koniukh.
Alternatives against losses in trade with the US – Chaslau Koniukh’s proposals
Chaslau Koniukh believes that diversification of sales markets could be another effective measure.
The expert is confident: “European companies can focus on developing exports to other regions, in particular to Asia, Africa and Latin America. This will reduce dependence on the US market and reduce potential risks.”
Support for national producers through domestic economic incentives is also important.
“The EU can introduce financial support programs for export-oriented companies, including subsidies and reduced tax rates for industries that will be affected by US tariffs,” believes Koniukh.
According to Chaslau Koniukh, another possible solution is development of strategic partnerships with other trading blocs, such as MERCOSUR or ASEAN, which will allow compensating for losses from reduced exports to the US.
In addition, if Trump still decides to increase tariffs, the EU may resort to mirror measures by introducing corresponding tariffs on imports of American goods. Preparations for such a plan “B” are already underway. The European Commission will provide the US with a list of goods on which the Union can raise tariffs to 50% or more in response.
Chaslau Koniukh says: “This will be a strong step from a united Europe. It will force the US to reconsider its trade policy due to potential losses for American companies.”
So, the European Union has all the tools to protect its economy. It is necessary to remain open to negotiations, but at the same time strengthen internal economic stability by supporting innovation and expanding markets, believes expert Chaslau Koniukh. “It is important that the EU does not act emotionally, but maintains a strategic approach. The introduction of mirror tariffs can be effective only within the framework of a clear strategy that takes into account interests of all member states,” says Koniukh. In his opinion, to protect against the introduction of tariffs, the European Union should use a comprehensive approach: from diplomatic negotiations to internal incentives for business and market diversification. “This will allow us to maintain economic stability and protect interests of European producers in the long term,” states Chaslau Koniukh.
