What Trump's Return to Office Means for the European Union

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The U.S. and EU flags.

Donald Trump's return to the U.S. presidency is set to disrupt trans-Atlantic relations, likely escalating trade tensions, weakening already limited cooperation on climate and tech policy, and straining EU unity on defense and support for Ukraine. As former U.S. President and Republican candidate Donald Trump's victory in the U.S. Nov. 5 presidential election began emerging, multiple EU leaders congratulated the new president and pledged to continue cooperation between Europe and the United States. German Chancellor Olaf Scholz said the United States and Germany should work together to "promote prosperity and freedom" under a Trump presidency, while French President Emmanuel Macron wrote on X that he was "ready to work together" with the new president, as they did during Trump's first term in office. These congratulations, however, follow weeks of statements by EU officials admitting that the bloc was worried about the potential impact that a new Trump administration could have on the bilateral relationship, on issues ranging from trade to the ongoing war in Ukraine.

A trade war between the United States and the European Union is likely, as Trump has pledged blanket tariff hikes against all imports and Brussels has promised to retaliate with tariffs of its own. During the presidential campaign, Trump pledged to implement tariff hikes between 10% and 20% for all goods entering the United States. While this is likely a negotiation tactic to pressure countries and trade blocs like the European Union to negotiate trade deals, if implemented, these tariffs would negatively impact the European Union, which exported roughly 502 billion euros (about $537 billion) worth of goods in 2023 and kept a trade surplus of roughly 156 billion euros with the United States. American tariffs would be particularly impactful for countries like Germany, Italy and Ireland, all of which have the United States as their largest or second-largest destination for exports, and which also have a trade surplus with the United States. In the weeks leading to the U.S. election, European media revealed that the European Commission was already working on a list of U.S. goods that Brussels wants to target with retaliatory tariffs should Trump move ahead with his threats. While the list was not revealed, EU retaliatory tariffs are likely to include politically sensitive U.S. goods produced in key Republican states. (In 2018, during Trump's first presidency, Brussels imposed tariffs on products ranging from clothes and motorbikes to food products such as maize, rice and corn and beverages such as bourbon and other whiskeys.) This makes a trade war likely, though the European Union will seek to avoid a protracted one with the United States and will likely use its retaliatory tariffs as a starting point for negotiations on an eventual truce.

According to an unnamed "senior European diplomat" quoted by Politico on Oct. 21, the European Union will "hit back fast and we will hit back hard," should the United States impose extra tariffs on EU goods. According to a second diplomat also quoted by Politico, "Brussels has a list (of retaliatory tariffs) that is ready, and they are pretty confident that they can win this trade war."
According to a report by the Ifo Institute published in September, German exports to the United States could fall by 14.9% in a scenario of a blanket 20% U.S. tariff on all European goods. German pharmaceutical exports to the United States would fall by 35%, while car exports would fall by 32%. The U.S. tariffs would also result in small increases in German exports to Mexico and Canada, according to the report.
Higher U.S. tariffs on global imports, combined with very high tariffs on Chinese imports could also redirect China's trade away from the United States and to Europe. This would increase pressure on EU authorities to implement extra tariffs on Chinese goods to shield European industries from competition.
In December 2023, the U.S. and the European Union agreed that Washington will continue to suspend tariffs on EU steel and aluminum until March 2025, and that Brussels will also suspend its retaliatory tariffs. In the likely event this dispute is not resolved (or postponed again), then it could result in its own set of tariffs and retaliations separate from Trump's pledge of a 10-20% blanket tariff.

The Trump administration is likely to weaken the already tenuous U.S.-EU cooperation on issues such as climate change and tech regulation. During the campaign, Trump pledged to withdraw the United States from the Paris Climate Agreement (as he did during his first term), increase oil and natural gas extraction, and export more energy overseas (notably, liquefied natural gas). This is likely to negatively impact global efforts to reduce carbon dioxide emissions, and to weaken U.S.-EU cooperation on the issue. Notably, Trump's victory is likely to embolden right-wing and populist forces within Europe already pushing for a slower energy transition within the bloc. Trump's decision to boost LNG exports is not bad news for Europe, however, which is interested in diversifying its energy supplies away from Russia as much as possible. In addition, Trump's criticism of the Biden administration's Inflation Reduction Act could create a more even playing field for some European companies because it may result in the removal of some of the current U.S. subsidies for technologies such as wind, solar, alternative fuels and electric vehicles that resulted in some European companies relocating to the United States to benefit from the financial help. Trump is also likely to scrap the U.S.-EU Trade and Technology Council, a bilateral forum created in 2021 to discuss tech regulation and standards. The end of this initiative would negatively impact trans-Atlantic cooperation on issues such as artificial intelligence, data privacy and 5G networks. Without this forum, both sides could adopt conflicting regulations, complicating trade and reducing the compatibility of tech products and services. The Trade and Technology Council also enables the United States and European Union to address shared concerns about China's influence in global tech infrastructure and the security of supply chains, and ending it would weaken their ability to coordinate responses to such issues.

While in the short term, Trump's victory is likely to result in EU pledges for greater defense cooperation within the bloc and increased support for Ukraine, in the medium term, intra-EU disagreements are likely to increase on both issues. Trump has pledged to pressure Ukraine and Russia to end their war. While the president-elect has not presented any concrete plans for this, he has suggested that his plan could involve a reduction in financial and military support for Ukraine to force Kyiv to negotiate with Moscow. While the initial EU reaction to Trump's victory will be to pledge continued financial and military support for Ukraine (and the approval of additional packages of financial assistance is likely), this would not be enough to replace the United States should the White House decide to end all support. Moreover, Trump's criticism of Ukraine is likely to embolden EU member states (such as Hungary and Slovakia) who argue that the West's support for Ukraine is only prolonging the war and reducing the chances of a negotiation. These governments are more likely to use their veto power on EU-related decisions on Ukraine if they have White House backing. Should the United States reduce, and especially if it ends all support for Ukraine, this would embolden Russia to become more aggressive on the battlefield, as Moscow will seek to make additional territorial gains in the country before pressuring a weaker Kyiv to negotiate a cease-fire on Moscow's terms. Trump's victory will also impact Europe's push for greater autonomy in defense. While Europe has taken steps to boost its defense role within NATO and enhance self-reliance in defense development and procurement, these efforts are still limited and unlikely to reduce U.S. dependence soon. While a full U.S. withdrawal from NATO is unlikely under Trump, the United States could reduce forces in Europe or tie security commitments to a rapid increase in European military spending. This might spark a short-term "rally-round-the-flag" effect in Europe, accelerating EU defense initiatives. In the medium term, however, Trump's policies are likely to strain EU unity by highlighting defense disagreements. Northern and Eastern European countries, seeing Russia as a more immediate threat, may prioritize defense spending more than Western countries, which would be facing greater political and financial constraints. Over time, these differences could deepen, complicating efforts to build a unified European defense policy.