In recent weeks, the US has expanded its 50% tariff on steel and aluminum to over 400 derivative products, creating a new, complex trade landscape with the EU. This goes beyond raw materials and now includes a wide array of manufactured goods. The EU has a new deal with the US, which introduces a 15% tariff ceiling on a large portion of European exports, including strategic sectors like vehicles. However, the 50% metal tariffs override this, a development that has caused alarm in Europe’s industrial sectors. The deal is a “first step,” with both sides still working out details, but the high metal tariffs remain a source of significant uncertainty and a point of contention.
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PSR Analysis: The expanded tariffs have severe consequences for agricultural, construction, and vehicle manufacturing. As stated by CECE (the Committee for European Construction Equipment) last week, the inclusion of machinery and equipment under the 50% tariff is a significant setback. For these industries, this means a steep increase in production costs, as key components like chassis and engine parts are now subject to the additional tariff on top of base 15%.
This puts European manufacturers at a competitive disadvantage, forcing them to either absorb the cost or pass it on to consumers, which could dampen demand. The complexity of calculating the metal content in each product creates a bureaucratic nightmare and adds to business uncertainty, making it difficult for companies to plan and invest in the US market. If an amendment is not agreed upon, the tariffs threaten to disrupt supply chains and could lead to reduced exports. According to the CECE, the new duties cover 80% of that trade flow, putting approximately €2.8 billion of EU exports at risk. PSR
Emiliano Marzoli is Manager-European Operations for Power Systems Research
