In 2025, the European Union is grappling with escalating U.S. tariffs under President Donald Trump, necessitating strategic economic responses.

Trump's tariff strategy invokes the International Emergency Economic Powers Act of 1977, declaring a national emergency due to foreign trade practices that affect U.S. manufacturing.

In retaliation, the EU approved tariffs on U.S. products effective April 15, targeting $420.45 billion in exports and potentially imposing over 80 billion euros in duties.

The EU aims to enhance its internal market, boost innovation financing, and secure new trade agreements to mitigate risks from U.S. tariffs, which could lead to a 0.3% contraction in GDP.

Despite its economic interdependence with the U.S., which poses vulnerabilities, the EU also possesses geoeconomic strengths, including access to a large consumer market and technological assets like ASML and Ericsson.

Investing in technological independence is a key strategy for the EU, as it seeks to reduce reliance on U.S. tech companies and bolster its global economic influence.

While the EU has economic tools like the Anti-Coercion Instrument to respond to U.S. economic coercion, using these against an ally is politically sensitive and could escalate tensions.

The EU plans to leverage its market power to negotiate from a position of strength, potentially imposing fines or regulatory measures on U.S. firms without directly escalating trade conflicts.

To strengthen its position, the EU is committed to maintaining unity among its 27 member states, avoiding fragmentation and bilateral agreements with the U.S. that could undermine collective bargaining power.

The U.S. tariffs, announced on April 2, 2025, are designed to tackle a significant trade deficit exceeding $1.2 trillion from the previous year, starting with a 10% rate effective April 5.