The European Union has retaliated against President Donald Trump’s tariffs with a massive £18 billion ($23.4 billion) in revenge tariffs, escalating the ongoing trade war between the US and EU.
The EU’s move aims to level the playing field and protect its industries after Trump’s administration imposed tariffs on EU goods.
Trump’s tariffs were initially intended to raise federal revenue and boost American jobs and manufacturing. However, the Trump tariffs will reduce after-tax income by an average of 1.9% and amount to an average tax increase of over $1,900 per US household in 2025. The tariffs will also raise nearly $2.9 trillion in revenue over the next decade and reduce US GDP by 0.7%.
The EU’s retaliatory tariffs target $23.4 billion worth of US goods, affecting various industries, including agriculture and manufacturing. The EU’s actions aim to pressure the US to reconsider its tariff policies. White House Press Secretary Karoline Leavitt said, “It was a mistake for China to retaliate. The president, when America is punched, he punches back harder.” This stance suggests the US may respond with even more tariffs, fueling the trade war.
The escalating trade tensions between the US and EU raise concerns about the global economy. Economic experts predict that increasing tariffs will lead to higher costs for Americans and reduced economic growth. The EU’s retaliatory tariffs may also impact global trade, leading to increased prices and reduced economic activity.
As the situation unfolds, businesses and investors are closely monitoring developments, awaiting further clarification on the trade policies and their implications for the global economy.