The European Commission has released a detailed analysis on the global economic implications of the sharp US tariff increases adopted under the second Trump administration.
According to the study, these measures represent the largest rise in US import tariffs since the 1930s and carry significant consequences for both the United States and its trading partners, including the EU.
The report finds that US tariffs weaken the American economy rather than strengthen it. Higher import duties increase production costs—because US industry heavily depends on imported inputs—and reduce the purchasing power of households. As a result, US real GDP declines, inflation rises, and the Federal Reserve is forced to tighten monetary policy, further dampening domestic demand.
While tariffs are intended to shift demand from foreign to US-made goods, they also trigger a strong appreciation of the US terms-of-trade, making American exports less competitive and suppressing export volumes. The study concludes that only around one quarter of the tariff burden is actually paid by foreigners, with the majority falling on US firms and consumers.
For Europe, the macroeconomic impact is moderately negative, driven mainly by lower EU exports to the United States. At the same time, European producers gain market share in third countries, where US exporters lose competitiveness due to higher costs and a stronger dollar. The EU nonetheless faces a terms-of-trade loss, which reduces real income.
The analysis also warns that retaliatory tariff measures would deepen losses on both sides, while rising financial uncertainty in the US could amplify the negative effects well beyond the direct impact of tariffs.
Overall, the Commission’s findings confirm that tariff wars create instability across global value chains, with widespread implications for industrial sectors—such as steel distribution—that rely on predictable, rules-based trade.
