Donald Trump loves tariffs. In his first inauguration as US president, he introduced a series of laws on imports of washing machines, solar panels, steel and aluminum that hit countries around the world, whether he was a political ally or not.

He promised more during his most recent presidential campaign. Now, in just over two months, the self-proclaimed “tariffmaster” will be sworn in as the 47th president.

In an effort to bring manufacturing jobs back to America, Trump considered adding a 10% tax on all imports to the US, then raised it to 20%. Anything coming from China would face a devastating 60 percent tax.

EU ‘mini China’ for Trump

Trump focused his attention on China but also called the EU a “mini China.” He warned in late October that the bloc would eventually pay off its debt and promised to pass the “Trump reciprocal trade bill.”

“They don’t buy our cars. They don’t buy our farm products. They sell millions of cars in the United States,” he said at a rally in Pennsylvania. “No, no, no. They will have to pay a big price.”

The European Union sells far more to the United States than it buys from the United States, but the two have much in common and much to lose.

The tariff dispute between the US and the EU could also become a problem for the US economy. Unprovoked US tariffs would undoubtedly lead to retaliation through counter-tariffs. This would make European goods more expensive for American consumers, raising prices overall and contributing to inflation.

High tariffs imposed by the United States on Chinese goods could harm Europe in other ways, too. If China can no longer export to America, it will turn to Europe to unload goods, possibly flooding the market.

In his message congratulating Trump on his latest victory, European Commission President Ursula von der Leyen reminded him that their common transatlantic ground is more than just allies.

“We are committed to a true partnership between our peoples that unites 800 million citizens,” he wrote. “Millions of jobs and billions of dollars in trade and investment on both sides of the Atlantic depend on the dynamism and stability of our economic relations.”

Trump 2.0: The price of US protectionism

Experts say that Trump’s proposed economic policies will create major problems for the European Union and especially Germany. Such US tariffs would lead to retaliation in the form of counter-tariffs.

“Trump tariffs pose a serious threat to the European economy and especially to export-oriented countries such as Germany,” said Niclas Poitiers, a research fellow at the Bruegel think tank who specializes in trade and international economics..

“The European economy is still reeling from its wrong decision to buy its energy from Russia and is suffering from falling demand from China. Trump’s tariffs are further darkening its economic outlook,” Poitiers told DW.

In a press release the day after the election, Clemens Fuest, president of the Munich-based ifo Institute, warned of “a pronounced protectionist agenda based on higher import tariffs and further restrictions on international trade, especially for China and potentially Europe.”

The Ifo Institute calculated that a 20% tax on imported goods could cause German exports to the United States to fall by about 15% and cause economic losses of 33 billion euros ($35.3 billion).

The Cologne-based German Economic Institute (IW) has calculated that a trade war that would impose 10% tariffs on both sides could cost the German economy €127 billion over Trump’s four-year tenure in the White House. Tariffs of 20 percent could cost the German economy €180 billion.

Keep foreign goods away

The EU is already suffering from slow growth. Germany’s largest economy is currently heading for its second year of contraction in a row, and We are particularly dependent on vehicle exports for growth. New US tariffs will make the situation worse.

The EU needs to increase its own competitiveness, strengthen its defense capabilities and address the challenges posed by China, according to a dossier published by the Federation of German Industry (BDI). The priority should be to prevent new tariffs. If this doesn’t work, countermeasures will be needed, but these will require a united front from all 27 EU member states.

Trump believes tariffs are an effective tool to advance domestic production goals and gain leverage in international negotiations, says Penny Naas, a public policy expert at the German Marshall Fund of the United States in Washington, D.C.

Naas says the president-elect sees tariffs as an effective way to rebalance trade deficits, and his tariff priorities are likely to be steel, automotive and goods that contribute important manufacturing jobs to the United States.

Big tariffs between friends?

“Trump is a dealmaker and has used the threat of tariffs in the past to extract concessions from trading partners,” Naas told DW. He wouldn’t be surprised if countries with trade deficits began negotiations with the new administration to buy more from the United States.

Bruegel’s Poitiers emphasizes that Trump’s tariffs will not lead to the end of globalization and trade, as some already fear.

But Poitiers says Trump’s next presidency could mark the end of US-led globalization. Despite this, most countries are still interested in cooperation and working together. More importantly, the EU needs to stop blocking deeper economic integration.

“Europe must now form coalitions with like-minded countries to preserve its prosperity, which is largely based on trade,” Poitiers said.

Edited by Ashutosh Pandey