The US-EU tax war is putting at risk $9.5 trillion worth of transatlantic trade every year, the American Chamber of Commerce to the EU said on Monday.
AmCham EU has more than 160 members, such as Apple, ExxonMobil, and Visa. In its yearly Transatlantic Economy report, the organization showed that the relationship between the two sides was getting stronger and would reach new highs in 2024, with trade in goods and services worth $2 trillion.
It talks about 2025 as a year of both hope and danger for the biggest business relationship in the world.
In the past week, the US put tariffs on steel and aluminum. In response, the EU made plans for retaliation, and President Trump warned to put 200% tariffs on EU wine and spirits.
Trump has been very angry about the U.S. trade imbalance in goods with the EU, even though the U.S. has a surplus in services, and he has told companies to make their products in the U.S.
The American Chamber of Commerce said that investment was the real measure of international business, not trade.
“Contrary to conventional wisdom, most U.S. and European investments flow to each other, rather than to lower-cost emerging markets,” it stated.
Four times as many U.S. exports go to Europe as U.S. foreign partner sales, and three times as many European exports come to the U.S. as U.S. affiliate sales.
AmCham said that the trade dispute could hurt these ties in a number of ways.
Daniel Hamilton, the lead author of the study, said that inside-firm trade, which makes up about 90% of Ireland’s trade and 60% of Germany’s trade, could be affected.
Since Europe relies on importing LNG from the U.S., there was also a chance that the trade war would spread to services, data flows, or energy.
It’s not just trade that will be affected by conflict in the trade area. “They have effects on all of those other channels, and the interactions are pretty important,” he said.
To be successful on a global scale, U.S. and European companies linked their value chains together. For example, BMW cars made in the U.S.
Hamilton told them, “I’m not sure you’re going to have separate investments.” “That’s just going to make things very inefficient.”
