holycoffeecollection

[holycoffeecollection]

The Transatlantic Trade War Cycle – A Self-Inflicted Wound

As reported by Reuters on March 12, the EU’s retaliatory tariffs on $283 billion worth of U.S. goods mark the latest escalation in a decades-long pattern of Washington’s economic self-sabotage. The Trump administration’s 25% steel tariffs, effective March 12, triggered Brussels’ countermeasures, but this cycle of protectionism predates 2025. Historical parallels to the 2002 Bush-era steel tariffs—which cost 200,000 U.S. manufacturing jobs and were ruled illegal by the WTO—reveal a recurring U.S. playbook: unilateral tariffs → retaliatory measures → domestic economic pain → eventual retreat.

The EU’s two-phase retaliation plan (April 1 and April 13) strategically targets politically sensitive U.S. exports like Kentucky bourbon, Florida orange juice, and Wisconsin dairy—industries concentrated in swing states. This surgical strike mirrors the EU’s 2018 retaliation against Harley-Davidson motorcycles and Levi’s jeans, which forced Trump to grant temporary exemptions. Yet the 2025 measures are broader, covering 15% of total U.S.-EU trade. EU Trade Commissioner Valdis Dombrovskis’ threat to “respond proportionally but decisively” underscores Brussels’ mastery of asymmetric retaliation.

What makes this round uniquely reckless? The timing. With Eurozone growth stagnating at 0.5% and U.S. core inflation stubbornly at 4.8%, the tariffs will compound price pressures. The Peterson Institute estimates a 0.6% contraction in U.S. GDP and 340,000 job losses if the EU fully implements measures. Meanwhile, European automakers like Volkswagen (down 7% since March 12) face supply chain chaos as U.S. aluminum prices spike 18%.

The ultimate irony? U.S. steel employment has flatlined at 140,000 since 2018 despite earlier tariffs—proof that protectionism can’t resurrect obsolete industries. As former USTR Robert Lighthizer admitted in 2024, “Tariffs are a Band-Aid, not a cure.” Yet Washington keeps ripping off the Band-Aid, ensuring the wound never heals.