'Step in wrong direction': Europe signals resolve against Trump tariffs

Closing in on one month of Donald Trump's second term in the White House, Europe is coming to terms with at least two sets of US tariffs and their implications.

Ahead of German elections, Chancellor Scholz says 'Europe is strong'

The Trump administration's announcement of 25 percent import tariffs on all steel and aluminum consignments entering the US starting March 12 and the executive initiative to calculate and impose reciprocal tariffs on all of America's trade partners have been met with a frosty reception in Europe. With the European Union's biggest economy Germany facing elections this week, Chancellor Olaf Scholz is unequivocal about his preference for free trade over protectionism. 

Free trade is a big advantage, and much of the growth in the world is because of free trade, Scholz told Bloomberg TV on Sunday. "It must be fair free trade but free trade is better than tariffs and protectionism," said Scholz. 

Germany had a $72 billion trade surplus with the US in 2024, according to Reuters.

Speaking from the standpoint of the EU, Scholz signaled that there is a willingness and capability to negotiate with the US from a position of strength. "When it comes to the EU, I think everyone knows we're a big economic area with a lot of strength ... We are strong enough to react to everything that's harming the European economy," he said, adding, "I'm sure it's better if we agree to something that helps all of us and it's good to know that Europe is strong enough to act and to react."

European Commission vows to 'react firmly and immediately'

Meanwhile, in a statement issued on February 14 in response to Trump's reciprocal tariffs announcement, the EU's executive arm — the European Commission said it viewed the proposal as a step in the wrong direction and vowed to react firmly and immediately against "unjustified barriers to free and fair trade, including when tariffs are used to challenge legal and non-discriminatory policies." It also highlighted the tariffs' potential to backfire on US citizens.

"The EU maintains some of the lowest tariffs in the world and sees no justification for increased US tariffs on its exports. Tariffs are taxes. By imposing tariffs, the US is taxing its own citizens, raising costs for business, stifling growth and fuelling inflation. Tariffs heighten economic uncertainty and disrupt the efficiency and integration of global markets," the European Commission's statement read. 

As per the European Parliament's website, the EU had a 48 billion euro ($50.3 billion) trade surplus with the US in 2023 from a total 1.6 trillion euro trade flow.

UK fortifies steel industry with $3.15 billion plan

A notable aspect of Trump's steel and aluminum tariffs imposition is that it removes exceptions and exemptions from a similar tariff he'd implemented in 2018. In the case of Europe's second-largest economy the UK, Westminster lawmakers are purportedly planning to make a fresh case for exemptions to their US counterparts. 

UK Business Secretary Jonathan Reynolds told the BBC that imposing tariffs on UK steel "would be negative for ourselves, it would be negative for the US as well," and that the UK could offer "very specialized" steel and aluminum exports to the US while tariffs would raise costs on US taxpayers. 

While the UK runs a services-driven trade surplus with the US, goods trade is balanced, while about 400 million pounds ($503.5 million) of UK steel is exported to the US annually, according to Politico.

The Starmer government is said to have adopted a "wait and see" approach. The Guardian quoted senior UK minister Pat McFadden as saying, "sometimes tariffs are announced, a couple of days later, they are unannounced." 

At the same time, a new plan has been announced to shore up the UK steel industry amid the tariff threat, with the government committing a $3.15 billion investment funded by the nation's sovereign wealth fund, reported Bloomberg. This is premised upon increasing demand for steel within the UK, such as the proposal to build a new runway at Heathrow Airport and the resulting steel requirement pipeline.

European leaders have been adamant that Trump's tariffs are misguided. "Honestly, I don't think it should be the top priority," French President Emmanuel Macron told CNN last week. 

Macron said, "The integration of the value chain between Europe and the US is super high ... It means if you put tariffs on a lot of sectors it'll increase costs and create inflation in the US. Is it what your people want? I'm not so sure."