This article was the Topic of the Week in the newsletter of week 6 in 2026.

Even though these tariff increases are now off the table, it remains clear: The economy must continue to expect turbulence. It is all the more important for the EU to act decisively and unitedly, strengthening its sovereignty by reducing strategic dependencies.

High Tariff Policy Burdens Trade

The current US administration's tariff policy has significantly altered economic relations with the European Union. At the beginning of 2025, the average US import tariff for EU goods was just under 2 percent; now tariffs of at least 15 percent apply. Copper, steel, and aluminum products are subject to rates of 50 percent, and in some cases up to 200 percent.

Moreover, the US tariff policy influences trade flows. German exports to the USA decreased by around 15 billion euros from January to November 2025; China has once again replaced the USA as Germany's most important trading partner—not least due to trade diversions and increased imports from China. In 2024, German-American trade volume amounted to 252 billion euros, and the investment stock of German companies in the USA reached 529 billion euros.

The results of the AHK World Business Outlook 2025 show that the US administration's investment strategy is not succeeding. Although German companies' investment plans in the USA have recently improved slightly, they are still significantly below the long-term average. In addition to tariff policies, other trade barriers as well as structural factors like labor shortages, high costs, and exchange rate changes are affecting decisions about the USA as a location. Planning uncertainty has caused German investments in the United States to halve in 2025. Without stable agreements, this trend is likely to continue.

Uncertainty Despite Deal

The EU-US agreement to limit US tariffs in August 2025 brought short-term relief, but American trade policy remains unpredictable. Despite the agreement, new US tariffs were announced in autumn 2025, including on trucks. Numerous sector-specific investigations by US authorities continue, which could lead to additional trade restrictions. Additional tariffs on metal derivatives already burden many companies and act as de facto market barriers.

Therefore, the new trade policy normal in US business is likely to be characterized by high tariffs—even independently of possible court decisions. Although a US Supreme Court decision by June 2026 could severely limit the use of so-called IEPPA tariffs (International Emergency Economic Powers Act), trade experts expect the US administration to use alternative mechanisms to increase tariffs in such cases.

Against this backdrop, the European Parliament is once again discussing the ratification of the tariff agreement reached between the EU Commission and the US President in August. This reflects an asymmetric balance of power: The EU accepts US tariffs of mostly 15 percent, while completely eliminating its own industrial tariffs toward the USA. For most German companies, the reluctant implementation is still important to avoid further escalations.

EU Needs to Become More Sovereign

In light of growing geopolitical tensions, greater sovereignty is essential for the European Union to protect its economic interests. Only together can the EU leverage the strength of its globally significant internal market in negotiations. This also includes being prepared for possible escalations and—as a last resort—being able to take countermeasures.

A DIHK survey from last August shows that a majority of companies want a clear, pro-European course in negotiations with the USA—even if this temporarily affects their own business interests. Against this backdrop, the DIHK Presidium adopted a position paper on transatlantic trade policy in November 2025. In addition to closer cooperation with the USA in regulation, customs processing, and energy, it explicitly calls for strengthening Europe's sovereignty by reducing strategic dependencies—in supply chains, the digital sector, and beyond. This also includes aligning with like-minded partners worldwide.

The reform of the World Trade Organization should therefore be decisively advanced: The economy also needs rapid progress in negotiations on bilateral trade agreements with Thailand, Malaysia, the Philippines, Australia, the United Kingdom, and the United Arab Emirates. Close networking with major economies strengthens the EU itself—and makes it a more attractive, reliable trading partner for the USA.