A new transatlantic trade war may be on the horizon as US President Donald Trump has threatened to impose tariffs of up to 25% on all EU goods. The US Tariffs impact could have serious economic consequences, particularly for France and its key industries.
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How US Tariffs Impact France?
France is a major exporter to the US, with industries such as aeronautics, pharmaceuticals, and spirits being key players. The French spirits industry, which exports goods worth €3.9 billion annually, is especially at risk. A previous trade war between 2019 and 2021 saw Trump impose similar tariffs, leading to a 40% drop in French wine exports and a loss of €500 million.
Another major sector under threat is pharmaceuticals, the second-largest French export to the US. If tariffs are imposed, French pharmaceutical firms might have to shift production elsewhere to stay competitive.
How Will the EU Respond?
Brussels has already stated that it will retaliate if the US enforces these tariffs. However, experts warn that counter-tariffs could harm European consumers. Similar disputes in the past saw the EU impose tariffs on US products like Harley-Davidson motorcycles, Levi’s jeans, and bourbon. The EU might take similar action this time to pressure the US into negotiations.
Which Countries Would Be Most Affected?
While France would suffer significant losses, Germany and Italy are even more vulnerable. Both nations have substantial trade surpluses with the US, making them key targets for increased tariffs. Economists estimate that a 10% tariff hike could shrink Germany’s economy by 0.5%, Italy’s by 0.4%, and France’s by 0.3%.
What Happens Next?
At this stage, the tariffs remain a threat without a confirmed timeline. However, with Trump’s repeated statements on trade restrictions, the EU should prepare for potential economic challenges. Whether through negotiations or retaliatory measures, the outcomes of this trade conflicts will have lasting effects on transatlantic relations.
If tariffs are imposed, businesses in France and across the EU will need to adapt quickly. The coming months will be crucial in determining whether this trade dispute escalates into a full-blown economic battle.