Forex Analysis & Reviews: 09.05.2025 - The European Union Prepares...

09.05.2025 09:25 AM

The European Union Prepares New Tariffs Against the United States

It has come to light that the European Union is planning to impose additional tariffs on U.S. exports worth €95 billion if current trade negotiations with President Donald Trump's administration fail to yield satisfactory results.

The proposed retaliatory measures would target industrial goods, including Boeing Co. aircraft, U.S.-made cars, and bourbon—which had initially been excluded from previous lists. The new proposal will be subject to consultations with member states and other stakeholders, and the outcome of the talks is expected to be announced by June 10.

The European Commission—the bloc's executive body responsible for trade matters—will begin negotiations with the U.S. administration this week in hopes of reaching a cooperative resolution to President Trump's new tariff regime. Commission officials are expected to present Washington with several proposals, including ideas for reducing trade and non-tariff barriers and encouraging investments in America, which may evolve into formal offers.

Clearly, since early April, the negotiations between both sides have seen little progress, and most U.S. tariffs are expected to remain in place. The EU stated this week that ongoing trade investigations launched by Trump will increase the volume of EU goods subject to new tariffs to €549 billion. Nevertheless, European Commission President Ursula von der Leyen said in an interview that the EU remains fully committed to reaching a negotiated outcome with the U.S. "We believe it's possible to strike mutually beneficial deals for consumers and businesses on both sides of the Atlantic," she said. "At the same time, we continue preparing for all scenarios, and today's consultations will aid us in that necessary work."

The EU's product list does not specify what tariff levels might be introduced. Any decisions on rates and amounts will only be made after a four-week consultation period and will depend on the results of the negotiations, according to a senior EU official. In addition to the proposed tariffs, the Commission will also consult with stakeholders on potential export restrictions on steel scrap and chemical products from the EU to the U.S., worth €4.4 billion. Experts note that such measures can be implemented in various ways—from quotas and licenses to outright bans on specific goods.

The new EU countermeasure list will be the first targeting U.S. goods beyond the €21 billion already subject to EU tariffs in response to Trump's 25% tariffs on steel and aluminum exports. Last month, the EU agreed to delay implementing those measures by 90 days after the U.S. lowered its so-called retaliatory rate on most EU exports from 20% to 10%.

EU-U.S. Trade Balance

In 2024, the EU exported €531.6 billion worth of goods to the U.S. and imported €333.4 billion, resulting in a trade surplus of €198.2 billion, according to Eurostat. However, when services are factored in, the picture becomes more balanced, as the U.S. registers a surplus in that segment. The gap between EU exports to the U.S. and U.S. exports to the EU amounted to €48 billion in 2023—just 3% of the total trade volume between the EU and the U.S.

EUR/USD Technical Outlook

Buyers of EUR/USD now need to focus on reclaiming the 1.1260 level. Only this would allow a test of 1.1310. From there, a move toward 1.1370 becomes feasible, but achieving this without the support of major market players will be difficult. The most distant target would be the 1.1400 high. If the pair falls, significant buyer interest is expected only around 1.1205. If no support is found there, it would be preferable to wait for a test of the 1.1150 low or to consider opening long positions from 1.1097.

GBP/USD Technical Outlook

Buyers of the British pound must overcome the nearest resistance at 1.3250. Only then can they aim for 1.3285, which will be difficult to breach. The most distant target lies in the 1.3310 level. If the pair declines, bears will try to regain control around 1.3212. A successful breakdown of this range would deal a serious blow to the bulls' positions and push GBP/USD toward the 1.3170 low, with the potential for an extended decline to 1.3125.

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