The European Union has announced it may halt ongoing trade negotiations with the United States following President Donald Trump’s latest threat to impose 35% tariffs on EU steel and aluminum imports. The move marks a significant escalation in transatlantic trade tensions.
- EU to review CETA trade agreement due to US tariff threats
- 35% tariff on EU steel and aluminum to take effect March 1, 2026
- €42 billion in annual EU exports at risk
- Germany faces €18 billion in export exposure
- EU has retaliated with $20 billion in tariffs on US goods
- Euro fell 1.4%, Euro Stoxx 600 dropped 0.9% post-announcement
The European Commission has formally notified its trading partners that it is reviewing the future of the Comprehensive Economic and Trade Agreement (CETA) in light of new US protectionist measures. This comes after President Trump announced plans to implement a 35% tariff on all steel and aluminum imports from the EU starting March 1, 2026, citing national security concerns. The proposed tariffs would affect approximately €42 billion worth of EU exports annually, with the automotive, machinery, and construction sectors most at risk. Germany, the EU’s largest exporter, stands to lose the most, with €18 billion in potential trade disruptions. France and the Netherlands would also face significant exposure, with €9 billion and €5.3 billion in affected exports, respectively. The decision to suspend negotiations reflects growing frustration within Brussels over what officials describe as a pattern of unilateral trade actions by the US. The EU has already imposed retaliatory tariffs on $20 billion worth of American goods, including bourbon, motorcycles, and agricultural products, in response to earlier US steel and aluminum duties. Financial markets reacted swiftly, with the euro dropping 1.4% against the dollar and the Euro Stoxx 600 index falling 0.9% following the announcement. Shares of major European exporters such as Volkswagen (VOW3.DE), Siemens (SIE.DE), and Airbus (AIR.PA) all declined, reflecting investor concerns over supply chain instability and reduced export competitiveness.