Donald Trump, the Republican US presidential candidate, said at a campaign event on Tuesday night that the EU will have to pay “a big price” if he wins the election.
Speaking at an event in Pennsylvania, Trump set out his thoughts on how the US will work with the EU when it comes to trade – and it his comments supports current economic sentiment in Brussels – that it could cost Europe billions.
“I’ll tell you what, the European Union sounds so nice, so lovely, right? All the nice European little countries that get together.
“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,” he said.
It comes as Trump previously proposed a potential 10% tariff on all European Union goods exported to the United States, which could profoundly impact Europe’s export-driven industries and disrupt its largest overseas trade relationship.
As EU exporters brace for possible obstacles, data from the European Commission underscores the economic vulnerabilities at stake, with Germany, Italy, and Ireland leading the list of countries most affected.
How crucial are European Union exports to the US?
As Euronews’ Piero Cingari highlighted in his report for Euronews Business, although China surpassed the United States (US) as the European Union’s top goods partner in 2020, the US remains Europe’s largest overall trading partner when services and investment are included.
According to European Commission data, the European Union exported €502.3 billion in goods to the US in 2023, making up a fifth of all non-European Union exports.
Moreover, the European Union is a net exporter of goods to the US, with a positive goods balance of about €158 billion in 2023.
The American market is especially vital for major European economies like Germany, Italy, and Ireland,
Germany alone accounted for €157.7 billion in exports to the U.S. in 2023. Italy and Ireland followed with €67.3 billion and €51.6 billion in exports, respectively.
Which European sectors are most at risk?
European exports to the US are led by machinery and vehicles (€207.6 billion), chemicals (€137.4 billion), and other manufactured goods (€103.7 billion), which together comprise nearly 90% of the bloc’s transatlantic exports.
According to the European Commission, these sectors were responsible for a significant trade surplus in 2023, with €102 billion in machinery and vehicles and €58 billion in chemicals.
Breaking down the export categories, medicinal and pharmaceutical products led in 2023 with €55.6 billion, followed by motor vehicles at €40.7 billion and medicaments at €36.1 billion.
Germany and Italy, as Europe’s leading producers of machinery and vehicles, face particular risk.
Automotive exports, a critical segment of Germany’s economy, could experience a drop in US demand due to price increases, further weakening an already stagnant the sector and jeopardising jobs.
Should a 10% tariff be imposed, these industries face potential loss of competitiveness due to an increase in final costs, risking production slowdowns and job cuts if US consumers turn to other markets for these goods.
For European industries, the threat of US tariffs comes at a time of existing economic strain, as the bloc’s manufacturing output has been consistently shrinking over the last two years.