Transatlantic relations face test with new levies

Department of Research, Studies and International News 05-04-2025

Washington’s move to unravel alliance, reshape trade dynamics, say observers

European leaders face a critical test of transatlantic relations as they prepare countermeasures against United States President Donald Trump’s sweeping new tariffs, with analysts warning the move threatens to unravel decades of Western economic alliance and reshape global trade dynamics.

European Commission President Ursula von der Leyen warned the global economy “will massively suffer” from Trump’s newly imposed tariffs, which included a 20-percent duty on the European Union.

Speaking to reporters on Thursday, she said the EU is already “finalizing a first package of countermeasures in response to tariffs on steel” and “preparing for further countermeasures to protect our interests and our businesses if negotiations fail”.

The impact of Trump’s measures, including a 25-percent tariff on car imports, has prompted emergency responses across Europe, with French President Emmanuel Macron calling crisis meetings, reported The Associated Press.

The implications extend far beyond trade, according to Wolfgang Roehr, former German consul general in Shanghai. “This is the end of the US as they like to describe themselves as an exceptional nation … That is over as of today, and the West will rearrange and reorganize itself,” he told China Daily. “This goes far beyond simple tariffs. It goes to the cohesion of the West as a transatlantic organization.”

Roehr, now an advisory professor at Tongji University, advocated for measured retaliation. “The EU should indeed retaliate, maybe not in kind, but with small steps, and then we look at what other countries achieve,” he said.

“The EU is a powerful market …It can do a lot, particularly in services — because in goods, the EU has a large surplus with the US, but in services, the US has a surplus with the EU and that can be targeted.”

“It would be wise for Brussels to retaliate in a way which does not hurt Europe,” he added.

While acknowledging this may not be easy, Roehr emphasized that the EU’s economic strength has been demonstrated in the past and will likely continue to shape future negotiations.

Looking beyond the immediate crisis, Roehr pointed to the relationship between the world’s largest economic blocs. “There are only three players in the world: the EU, China, and the US. If the US takes itself out of the game for the next four years …the other two players, the EU and China, have to work together more to keep the world afloat.”

German daily newspaper Handelsblatt estimated the 25-percent auto tariff could cost German automakers up to 11 billion euros ($12.1 billion), while European Central Bank President Christine Lagarde warned the impact “will be negative the world over and the density and the durability of the impact will vary depending on the scope, on the products targeted, on how long it lasts, on whether or not there are negotiations”.

The UK escaped comparatively lightly with a 10-percent tariff. Alan Barrell, chairman of Cambridge Worldwide Associates, which consults on China-West business collaboration, told China Daily the UK would take a cautious approach.

Barrell said: “Everything you see and hear shows that the UK is trying to be very, very careful, and they are still trying to negotiate some special deals with the US in the background. But I think we need to steel ourselves for a very difficult time.”

Barrell warned of broader implications for global stability. “My concern is for the whole world economy because what he is doing, in the way that he is doing it, is highly destructive to the world order as it exists today,” he said. “What we see happening is the very well-established alliances, the Western alliances, are crumbling because America can no longer be trusted by its valued partners.”