Authored by Kenin M. Spivak via RealClearWorld,
In March of 2025, President Donald Trump imposed a 25% tariff on imports of steel, aluminum, automobiles, and certain automobile parts. European Union (E.U.) members, except Hungary, announced retaliatory tariffs of 10% to 25% on specific U.S. imports.
On April 2, Trump proclaimed, “Liberation Day” and added a global baseline tariff of 10%, plus customized so-called “reciprocal tariffs.” Because the 2024 U.S. deficit with the E.U. was 39% of imports, he imposed a “discounted” 20% reciprocal tariff on most E.U. goods not subject to the 25% tariff. After a week, excluding China, Trump suspended reciprocal tariffs for 90 days to facilitate negotiations, and the E.U. delayed its retaliation.
While this may appear to be Trump starting a trade war, in reality it’s Trump ratcheting up a long-simmering war against the United States fought with protectionist trade policies, including by some of our closest allies. Set aside that Trump’s reciprocal tariffs are actually punitive tariffs, that the trade war is depressing global stock and bond markets, raising the specter of recession, and threatening U.S. economic primacy. Those are criticisms largely based on trying to do too much, too quickly. Turning to the disease, Trump is right. We sometimes are treated better by our enemies than by our so-called trade allies. That’s before counting the trillions of dollars America has spent on their defense.
Together, the U.S. and E.U. represent almost 30% of global trade and 43% of global GDP. Last year, the U.S. exported $370 billion of goods to the E.U. and imported $606 billion, generating a $236 billion deficit. The U.S. last had a surplus with the E.U. in 1991.
Most Americans don’t realize how powerful the U.S. economy is compared to the E.U. In 2024, the U.S. GDP exceeded $29 trillion (about $86,600 per person), compared to $19 trillion for the E.U. (about $45,300 per person). When the E.U. takes advantage of the United States, it really should think twice.
High tariffs are not Europe’s main offense. Instead, the E.U. deters U.S. competition by requiring American companies to comply on a worldwide basis with its far-left antitrust, censorship, data privacy, and DEI rules; limits government purchasing to products with at least 50% local components and E.U. ownership; and sets standards for non-E.U. companies that vary country-by-country, making it prohibitively expensive to do business in the E.U.
One of the starkest results of the trade imbalance is the auto sector. Last year, the U.S. imported 757,654 new vehicles from the E.U., but the E.U. imported only 169,152 new vehicles from the U.S., many of which were manufactured by U.S. subsidiaries of E.U. automotive companies.
The U.S. is the world’s second-largest agricultural trader, behind the E.U. Over the last 25 years, the share of U.S. agriculture exports going to the E.U. dropped from 15% to 7.2%. Total exports grew from about $9 billion to $13 billion, well below inflation. Conversely, from 2013 to 2024, U.S. agriculture imports from the E.U. nearly tripled to about $34.5 billion.
In February, President Trump called the E.U.’s trade practices an “atrocity” and asserted that the E.U. “take[s] almost nothing and we take everything from them.”
According to the U.S. Trade Representative report on Foreign Trade Barriers, E.U. barriers include, among many others:
While income and savings rate disparities are in part responsible for the E.U.-U.S. trade deficit, the breadth of restrictions plays a significant role. The U.S. should not be subsidizing the E.U.’s economy, paying for its defense, or relinquishing control of international standards organizations to E.U. members. When it comes to global trade, liberté, égalité, fraternité is an empty slogan.
If the E.U. fails to make considerable concessions within the next few months, Trump should respond with properly computed and targeted tariff and non-tariff measures. While this may reduce trade, economic growth, and prosperity, if well-calibrated, the blame – and the brunt of the cost – will fall squarely on the Europeans.
Kenin M. Spivak is founder and chairman of SMI Group LLC, an international consulting firm and investment bank. He is the author of fiction and non-fiction books and a frequent speaker and contributor to media, including RealClear, The American Mind, National Review, television, radio, and podcasts.