EU Warns of Trade War as Trump Threatens New Tariffs

European leaders cautioned that U.S. President Donald Trump's tariff threats against the EU could spark a damaging trade war. EU foreign policy chief Kaja Kallas warned that escalating tensions would only benefit China. European Commission President Ursula von der Leyen reaffirmed that the EU is prepared to respond to unfair trade measures while emphasizing the need for diplomacy.

Trump, citing trade imbalances, reiterated that tariffs on the EU were imminent, claiming the bloc restricts U.S. car and farm product imports while benefiting from the American market. Despite imposing tariffs on Mexico, Canada, and China, he temporarily paused them for Mexico and Canada.

Germany’s opposition leader Friedrich Merz warned that U.S. consumers would bear the cost of tariffs. French central bank governor Francois Villeroy de Galhau criticized Trump's trade policies as harmful, particularly to the auto industry. European carmaker shares declined on Monday over concerns about new tariffs.

Eurostat data shows the U.S. had a €155.8 billion goods trade deficit with the EU in 2023. However, the U.S. maintained a €104 billion surplus in services trade with the bloc. EU diplomats are monitoring Trump's next move, aiming to avoid escalating tensions while preparing potential countermeasures.