The US-China Trade War Heats Up: Tariffs Hit European Business

The Trump administration's return to aggressive trade policy has dramatically reshaped the global economic environment. The imposition of tariffs on a wide range of imports — from steel and aluminium to cars and electronics — has not only targeted China but has also caught European businesses in the crossfire. The resulting uncertainty has disrupted supply chains, cancelled contracts and forced companies across the Atlantic to recalculate their strategies.

Spanish and German defence companies have been among the most visible casualties. Several firms reported multi-million losses on contracts with the US military and government after new tariff restrictions made their components and products uncompetitive. Defence contractors that had built their business models around transatlantic cooperation now face an uncertain future as the political relationship between Washington and Brussels deteriorates.

The European Union has responded by threatening retaliatory tariffs on American goods and by accelerating efforts to reduce strategic dependence on the United States in areas including defence, technology and energy. The push for "strategic autonomy" — long debated in European capitals — has acquired new urgency in the face of American unpredictability.

For global business, the fragmentation of trade into competing blocs represents a fundamental structural challenge. Companies that built global supply chains optimised for an open, rules-based trading system must now operate in a world where political risk has become central to every business decision. Economists warn that sustained trade conflict could shave significant percentage points off global GDP growth over the medium term.