USA‑EU: The specter of tariffs looms large again

USA–EU: The Specter of Tariffs Looms Again

August 6, 2025 – Economics Desk

Tomorrow, August 7, 2025, marks the deadline to avoid a new escalation of tariffs between the United States and the European Union. After months of complex negotiations on steel, aluminum, agricultural products, and the digital tax, Washington and Brussels remain far from a final agreement. If no deal is reached, a new wave of tariffs could be triggered, affecting key sectors and threatening the fragile economic recovery on both sides of the Atlantic.

What Do the Tariffs Involve?

Without an agreement:

• The United States will reinstate tariffs of up to 25% on European steel and 10% on aluminum.

• The EU will respond with tariffs of up to 20% on American motorcycles, whiskey, denim, agricultural goods, and cosmetics.

• Digital services and technology products could also be included, with consequences for the ICT sector.

The Most Affected Sectors

• Manufacturing industry: European steel and aluminum will face higher export costs. In Germany, France, and Italy, there are fears of a domino effect on the automotive and precision engineering sectors.

• Agri-food: European wine, cheese, and olive oil—as well as American meat and corn—are at risk of export declines.

• Tech and digital: A possible EU retaliation through the Web Tax could target major US tech giants like Google, Meta, Amazon, and Apple.

• Fashion and consumer goods: Tariffs on denim, perfumes, and cosmetics would impact European brands rapidly expanding in the US.

Expected Economic Impact

According to the Peterson Institute for International Economics, an escalation could cost:

• up to 0.4% of the EU’s GDP by 2026;

• around 0.3% of US GDP, with a heavier toll on agricultural and industrial states;

• the loss of over 120,000 jobs in Europe and 80,000 in the US, including both direct and indirect employment.

SMEs will be the most vulnerable, while large multinationals may respond by offshoring production or raising prices.

Geopolitical Effects and Global Trade Consequences

A breakdown in negotiations risks further undermining the already fragile geopolitical balance between the two Western powers. The lack of a shared vision weakens transatlantic alignment on other critical issues, such as relations with China, climate policy, and AI regulation.

Moreover, a protectionist escalation between the US and EU could reignite fears of a new global trade war, with negative repercussions on global supply chains.

How to Protect Your Portfolio: The Role of ETFs

In a climate of political and commercial uncertainty like the current one, many investors are turning to tools that offer agility, diversification, and transparency to safeguard their capital. Exchange-Traded Funds (ETFs) represent an effective solution to balance risk without sacrificing potential returns.

• Geographic diversification: Investing in global or multi-country ETFs can reduce exposure to individual markets affected by tariffs.

• Sectoral and thematic: ETFs focused on less exposed sectors (such as healthcare or renewable energy) can offer shelter compared to more vulnerable ones (like industrials and agri-food).

• Bond or low-volatility ETFs: These instruments help reduce overall portfolio volatility during turbulent periods.

• Dollar hedging: Currency-hedged ETFs can help European investors mitigate the impact of dollar volatility in response to market shocks.

ETFs combine liquidity, low costs, and flexibility, making them one of the most popular choices for navigating international market instability.

What to Expect Tomorrow

If no agreement is signed by tomorrow, the United States may formalize the implementation of tariffs as early as tomorrow night. Europe, for its part, has already approved a list of countermeasures ready to take effect within 72 hours.

Despite everything, diplomatic efforts are in full swing. Sources close to the negotiations speak of “cautious optimism,” but significant gaps remain on agriculture and digital trade.

In Summary

The absence of an agreement between the US and the EU is not just about tariffs: it is a political test of the West’s ability to speak with one voice in an increasingly multipolar world. If division prevails tomorrow, the price will be paid by businesses and citizens on both sides of the Atlantic.

“A rift between the US and the EU would be a victory for our global competitors,” stated European Commission President Ursula von der Leyen this morning.

Tomorrow, more than a trade deal is at stake. Investors have been warned.