The aggressive trade tariffs imposed by the US will impact all parties involved – the question being who loses more?

On April 2, 2025, President Trump announced aggressive tariffs: a 10% tariff on all products imported into the U.S., regardless of origin, along with higher tariffs specifically targeting numerous countries around the world. For instance, a 20% tariff will now apply to all goods exported to the U.S. from EU member states. Overall, these measures represent a shift unprecedented in the past 100 years of U.S. trade policy: the effective tariff rate on imports will rise from 2.3% to a record-high 22–23%. This extraordinary decision is expected to have a significant impact not only on the affected economies, but also on the U.S. economy and global trade as a whole.

These measures come on the heels of actions taken by the new U.S. administration over the past two months, which include a 25% tariff on all imported cars as well as on steel and aluminum products. Similarly, a 10% tariff—later increased to 20%—was imposed on imports from China, and a 25% tariff was introduced on imports from Canada and Mexico (temporarily suspended in February, but reinstated with the major announcement in April). In this volatile environment, the RoEM team analyzed trade relations between the EU and the U.S. in order to gain a clearer understanding of the potential impact these tariffs may have on the EU economy, and by extension, on the Romanian economy.

What do EU and Romanian trade data with the U.S. reveal?
Analyzing the structure of Romania’s foreign trade shows that the U.S. accounts for only 2.34% of the country’s total trade, including both exports and imports. The reverse trade flow is also less significant: Romania makes up just 0.10% of the U.S.’s total foreign trade. However, it would be misleading to conclude that these tariffs will have a negligible impact on Romania’s economy.

On one hand, the relatively low 2.34% share is partly due to the fact that trade statistics within EU member states include intra-EU trade. On the other hand, Romania’s dependence on the U.S. is much greater when viewed indirectly—through its integration with other EU economies. At the EU level, the U.S. accounts for 7.1% of total trade, a higher share driven largely by strong commercial ties between the U.S. and Western European countries. In practice, this share is even higher if intra-EU trade is excluded, as the U.S. is the largest non-EU export partner for the EU.

Since Romania is deeply embedded in the supply chains of larger EU economies, the newly imposed tariffs will have indirect negative effects on the Romanian economy as well. For example, Germany’s top exports to the U.S. include cars and car parts—sectors that will see diminished competitiveness under the new tariffs. This impact will be felt in Romania’s car parts industry too, which supplies components to German car manufacturers.

The Expected Impact of Tariffs
Tariffs generally weaken economic performance—both in the countries targeted by the tariffs and in the country imposing them. The ultimate outcome of increased barriers to international trade is always negative; the only question is, who loses less? The first direct effect of the tariffs introduced by the Trump administration will likely appear in the form of inflationary pressure in the U.S., as tariffs will immediately drive up the final prices of imported goods and, in turn, increase overall inflation. Even products manufactured in the U.S. may become more expensive if they rely on imported raw materials or components. Replacing these with domestic production—even if assuming this is a feasible scenario—requires a longer transition period, which in the short term will directly reduce the growth rate of U.S. GDP.

In the longer run, the U.S. economy will also suffer, even if global supply chains eventually adapt to the new circumstances. Domestic producers in the U.S. are expected to become less efficient on average, as the introduction of tariffs reduces competition in the domestic market.

On the other side, EU exports to the U.S. will also become less competitive—since the new tariffs directly increase prices on the American market—leading to a decline in production volume within the EU. In addition, the inability to expand within the U.S. domestic market will hurt a number of large European firms, reducing the overall efficiency of European manufacturers. Declining exports and production efficiency in EU countries will translate into slower economic growth, especially given that EU industry was already experiencing a difficult, nearly stagnant period before the tariffs were introduced.

Europe-wide economic simulations suggest that tariffs imposed on EU countries could lead to a mild economic downturn in the short term. However, the U.S. would not escape contraction either, even if the impact might be somewhat less severe. If the EU responds with reciprocal tariff increases against the U.S., the negative effects described above—particularly inflation and economic slowdown—would be significantly amplified. Moreover, the prolonged uncertainty and unpredictability of a trade conflict would jeopardize business planning and corporate investment, both of which are essential to sustaining long-term economic growth.