Trump’s Tariffs: What Escalating Trade Tensions with the US Imply for EU Exporters and Supply Chains

US trade policy has taken a sharp turn away from multilateralism, with sweeping new tariffs posing a serious threat to global supply chains. As the US remains the EU’s largest export market for goods, these measures carry significant repercussions for the bloc. Exports to the US are heavily reliant on a small number of companies and high-value business relationships—making the EU particularly vulnerable to targeted trade measures. In Germany, the top ten business relationships alone account for a fifth of maritime exports to the US. Intra-company trade also plays a crucial role: One quarter of automotive exports from Germany to the US is between business entities with clear common ownership. Simulations further suggest that a transatlantic tariff conflict would halve EU exports to the US and trigger widespread production losses, with Germany’s GDP contracting by approximately 0.33% in the long term. To limit these economic damages and build long-term resilience, the EU should accelerate its export diversification by deepening trade ties with Free Trade Agreement partners and enhancing integration within the single market.