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US-EU Tariff Dispute Threatens $9.5 Trillion in Trade
The escalating US-European tariff dispute is putting at risk $9.5 trillion worth of annual business, according to a warning from the American Chamber of Commerce to the EU (AmCham EU) on Monday.
In its annual Transatlantic Economy report, AmCham EU—whose members include Apple, ExxonMobil, and Visa—highlighted a record-breaking 2024 trade relationship, with goods and services trade reaching $2 trillion. However, recent tariff actions have raised concerns. The US has imposed tariffs on steel and aluminum, while the EU has outlined plans for retaliation. President Donald Trump has also threatened to impose 200% tariffs on EU wine and spirits.
Trump has criticized the US goods trade deficit with the EU, despite a US surplus in services, and has called on manufacturers to relocate production to the US.
AmCham emphasized that trade is just one aspect of the transatlantic economy, with investment playing a far larger role. "Contrary to conventional wisdom, most US and European investments flow to each other, not to emerging markets," the report stated.
US foreign affiliate sales in Europe are four times greater than US exports to Europe, and European affiliate sales in the US are three times higher than European exports. AmCham cautioned that the trade conflict could disrupt these critical investments.
Daniel Hamilton, the report's lead author, warned that the impact could extend beyond trade, affecting services, data flows, and energy—particularly as Europe relies on US LNG imports.
"Ripple effects from the trade conflict won’t be confined to trade itself. They will affect other channels of interaction, creating significant disruptions," Hamilton said.
US and European companies are deeply integrated, with value chains that make them globally competitive. For example, BMW exports cars from the US to Europe. Hamilton noted that disrupting these connections could make global operations inefficient and costly.