The United States is considering imposing 25% tariffs on European Union exports, a move that could significantly impact the food and agriculture sector. According to the latest RaboResearch report, these tariffs could disrupt trade, particularly affecting agricultural machinery and processed food products.
US-EU Trade Dynamics
The EU currently holds a significant trade surplus in the food and agriculture sector. In 2024, the EU exported €38 billion worth of agricultural products to the US, while imports from the US totaled €14 billion. The European Union primarily exports high-value products such as essential oils, wine, olive oil, and dairy, while the US supplies mostly raw agricultural commodities like soybeans.
Experts note that the US market is more critical for European food and agriculture companies than the EU market is for US companies. If tariffs are imposed, European businesses heavily reliant on exports to the US will be hit the hardest.
Which Industries Will Be Most Affected?
According to RaboResearch, the industries most vulnerable to these tariffs include:
- Agricultural machinery manufacturers – US farmers, already facing tight profit margins, may switch to domestic alternatives instead of purchasing EU equipment.
- Processed food products – Dairy, beverages, and pasta could see moderate impacts, depending on consumer price sensitivity.
On the other hand, sectors such as animal protein, fertilizers, and sugar are expected to experience minimal effects, as the US is not a major market for these products.
How Can EU Companies Respond?
Analysts suggest several possible strategies for EU companies to mitigate the impact of tariffs:
- Passing costs onto US importers while maintaining prices.
- Lowering prices to remain competitive in the US market.
- Exiting the US market or shifting production to the US to bypass tariffs.
- Reconfiguring supply chains to minimize tariff exposure.
Global Trade Implications
Beyond EU-US relations, these tariffs could have far-reaching consequences for global trade. Countries like Canada, Mexico, and Brazil, which also face US-imposed tariffs, may retaliate with their own trade barriers, leading to a complex web of regional and sectoral trade disruptions.
Negotiations between the EU and US are expected in the coming months to address concerns and potentially prevent major disruptions in the global agri-food industry.
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