After China, Mexico and Canada, why Trump hinted at using tariffs against European Union

US President Donald Trump imposed tariffs on Canada, Mexico and China on Saturday (February 1), which were to come into effect on Tuesday, but it was announced late on Monday that tariffs on Mexico and Canada have been paused for the next 30 days. This was reportedly because of assurance of cooperation from the countries on matters such as immigration. In the decision on Saturday, Trump cited the inflow of “illegal aliens” on Monday, the term he uses for undocumented immigrants, and “drugs” behind the move. The move was among the flurry of decisions the new administration has taken after Trump assumed power on January 20. On Monday, he mentioned another potential target, telling reporters that tariffs on goods imported from the European Union into the US could happen “pretty soon.” In response, German chancellor Olaf Scholz said EU members should focus on cooperation among themselves, and with the US. French President Emmanuel Macron also supported unity within the bloc, saying, “If our commercial interests are attacked, Europe, as a true power, will have to make itself respected and therefore react.” According to The Guardian, stock markets in the UK and Europe suffered heavy falls after the tariffs were announced on Saturday, prompting fears of a global trade war. What explains Trump’s threats to Europe and what does data say about their trade? What were his views on Europe during his first term? ## What data says about US-EU trade The top five sources of US goods imports in 2022 were the EU ($553.3 billion), China ($536.3 billion), Mexico ($454.8 billion), Canada ($436.6 billion) and Japan ($148.1 billion) in terms of value. Within the EU, Germany ($146.6 billion) was the biggest supplier. On the other hand, US exports to the EU totalled $350.8 billion. The difference between the value of what a country exports to another, and the value of what it imports from that country is known as a “trade deficit”. During his first presidential term too, Trump was critical of the United States’ trade deficits with other countries, though not all economists believe that deficits are necessarily cause for alarm. This is because a lot depends on how countries buy and sell, and the relative strengths and weaknesses of countries in producing certain goods or services. In the case of the US, it can also mean that countries having a trade surplus with it may then invest their money in US markets and companies, given its position as a global economic superpower. Therefore, deficits are not always bad for countries. Notably, the EU was the biggest exporter of medical and pharmaceutical products, motor vehicles and medicaments to the US in 2022 and 2023. The historical strength of Germany’s auto market, and the decline of the domestic US auto manufacturing industry since the 1970s is one reason for the imbalance. ## Behind Trump’s criticism of EU Trump has viewed deficits negatively in relation to many of the United States’ trade partners. In dealing with them, he has frequently invoked tariffs, once calling it his “favourite” word in the dictionary. While on the campaign trail in October 2024, he said, “I’ll tell you what, the European Union sounds so nice, so lovely, right? All the nice European little countries that get together,” adding, “They don’t take our cars. They don’t take our farm products. They sell millions and millions of cars in the United States. No, no, no, they are going to have to pay a big price.” But, according to the US government’s data for the fiscal year 2023, the EU was among the top five markets for US agricultural exports (worth $12.3 billion). On Monday, he repeated the claims: “They don’t take our cars, they don’t take our farm products, they take almost nothing and we take everything from them. Millions of cars, tremendous amounts of food and farm products.” Trump has championed strengthening domestic manufacturing as part of his larger political platform, especially in relation to the auto industry. Criticising EU imports aligns with this. There is also precedent for tariffs on the EU. The Guardian reported that Trump hit the EU (along with Canada and China) with tariffs on aluminium and steel in 2018, under section 232 of the Trade Expansion Act which gives the US President power to impose tariffs on certain industries. Trump also invoked the threat of tariffs against Colombia recently, over the country refusing to take in undocumented immigrants. Colombia later agreed to receive undocumented Colombian immigrants to the US. In a recent fact sheet shared by The White House, it was pointed out how President Trump “leveraged tariffs to successfully resolve national security concerns with Colombia, swiftly reaching an outcome that prioritizes the safety and security of the American people and the sanctity of our national borders.” Thus, tariffs are also seen as a tool to get countries to come to agree with US policy. However, tariffs are also a double-edged sword because they can result in an increased cost of products for consumers, as companies pass along the cost of tariffs. It can also mean a reduced set of options for consumers. Many have pointed to possible tensions between the US and its allies – Canada, the EU, etc. – if tariffs are extended to them at a significant scale.