Transatlantic Trade at Risk: AmCham Warns of Economic Fallout Amid US-EU Trade War

The economic relationship between the United States and the European Union is teetering on the edge of uncertainty as a renewed trade war threatens to unravel years of cooperation. A new report from the American Chamber of Commerce (AmCham) in Europe has highlighted the growing risks facing the transatlantic economy, despite a strong performance in 2024.

With President Donald Trump's latest wave of tariffs targeting long-standing trade partners, including Canada and Mexico, retaliatory measures from the EU signal an escalating dispute that could have far-reaching consequences.

The Transatlantic Economy at a Crossroads

In its latest assessment, AmCham warns that 2025 presents both significant risks and opportunities for the transatlantic economy. The challenges are extensive—ranging from trade disputes and political instability to energy crises, supply chain disruptions, and fierce competition for raw materials. The growing influence of China and the ongoing war in Ukraine add further complexity to an already volatile economic landscape.

Despite these hurdles, AmCham remains cautiously optimistic. The report projects economic growth on both sides of the Atlantic, albeit at different rates. The US economy is expected to expand by 2.7%, while Europe is forecasted to see a modest 1% increase. However, lingering trade tensions, inflationary pressures in the US, and high regulatory and energy costs in Europe continue to fuel economic uncertainty.

While risks loom large, AmCham believes there is still a path forward.

'The transatlantic economy is not just the world's largest commercial partnership—it is also its most consequential,' the report states. 'If both sides align on key priorities, they can reinforce their leadership in a competitive global economy.'

A £7.30 Trillion Trade Milestone in 2024

Despite mounting tensions, the transatlantic economy remains a powerhouse, valued at £7.30 trillion ($9.5 trillion), making it the most extensive and integrated commercial partnership in the world. This economic alliance supports approximately 16 million jobs across the US and Europe, further underscoring its global significance.

In 2024 alone, US trade in goods and services with Europe reached approximately £1.54 trillion ($2 trillion), including £1 trillion ($1.3 trillion) in goods and £365.11 billion ($475 billion) in services. This surge in trade reflects a resilient recovery despite external challenges.

European companies play a critical role in the US economy, employing around 5.3 million workers, while American firms have created roughly 4.6 million jobs across Europe. Additionally, US foreign affiliate sales in Europe hit an estimated £3.07 trillion ($4 trillion), demonstrating the strength of cross-border business operations.

The Trade War Heats Up: A Risky Gamble

In February 2025, President Donald Trump ignited further tensions by imposing a 25% tariff on European Union (EU) imports, aiming to reduce the US trade deficit. The sweeping measure targeted key industries, including automobiles and agriculture, prompting immediate backlash from European leaders.

In response, the EU announced plans to reinstate tariffs first imposed in 2018 and 2020, targeting US goods worth approximately £3.77 billion (€4.5 billion). The retaliatory tariffs, set to take effect on 1 April 2025, include levies on steel, aluminium, and agricultural products, escalating trade tensions between the two economic giants.

Further complicating matters, the European Commission has proposed a 15% reduction in steel import quotas, aiming to shield the EU steel industry from an expected surge in cheap steel diverted from the US market. This move seeks to protect European manufacturers already struggling with high energy costs and aggressive competition from Asia.

A Common Geo-Economic Base Under Threat

Malte Lohan, CEO of AmCham EU, has stressed the importance of preserving transatlantic economic ties, warning that escalating trade disputes could have long-term consequences.

'Leaders on both sides of the Atlantic now have a window of opportunity,' Lohan stated. 'Rather than engaging in a tit-for-tat that only hurts the two economies, they should come to the negotiating table to determine what a positive deal for the transatlantic economy looks like. The numbers show that it is in both sides' interests.'

AmCham argues that the transatlantic economy is not just a trade relationship—it is a geo-economic foundation that gives businesses a competitive edge in global markets. The current crisis presents a crucial moment for leaders to decide whether they will prioritise economic cooperation or risk deepening the divide.

What's Next?

As negotiations between the US and EU remain ongoing, both sides are under pressure to find a resolution that avoids long-term economic damage. With tariffs and countermeasures set to take effect soon, businesses on both continents are bracing for impact.

The transatlantic economy has long been a pillar of global stability and growth, but as tensions rise, the question remains—will political leaders prioritise cooperation, or will economic conflict become the new normal?