Economic War on the Horizon?

While Trump has dubbed today “Liberation Day,” future historians might give it a different name. His tariff plan remains a closely guarded secret, with only a few anonymous leaks providing a vague outline. Analysts predict that the first phase of an economic war between the U.S. and the European Union may be unfolding.

The EU exported €382 billion worth of goods to the U.S. in 2024, according to the International Trade Centre. Trump’s tariffs could reduce this by €85 billion. Germany, with its strong automotive and pharmaceutical industries, is expected to be hit hardest.

German Auto Industry at Risk

German car manufacturers like Mercedes-Benz, BMW, and Volkswagen ship vast amounts of vehicles and parts to the U.S. through ports like Hamburg and Bremerhaven. Tariffs could severely impact production and sales, also affecting countries like Slovakia, Hungary, and Austria, which have become major hubs for car assembly.

European Pharmaceuticals Also in Danger

The pharmaceutical industry is also at risk, with Ireland and Denmark among the largest exporters to the U.S. Trump’s tariffs could target semaglutide, a weight-loss drug produced by Denmark’s Novo Nordisk, which sends two-thirds of its annual production to the U.S.

The European Central Bank is also concerned, considering further interest rate cuts to prevent inflation spikes.