• The European Commission is refraining from public comment on new U.S. tariffs until after a call between EU and U.S. trade chiefs.
  • Retaliatory measures, delayed until mid-2025, could target automotive and aluminum sectors as tensions escalate.
  • The EU's spring forecast shows tariff uncertainty dragging down growth projections to 1.1% for 2025.

Diplomatic Pause in Trade Spat

The European Commission is maintaining radio silence on recently imposed U.S. trade tariffs until top transatlantic trade officials hold scheduled discussions, according to people briefed on the matter. This temporary withholding comes as Brussels prepares potential countermeasures against Washington's latest levies on EU automotive and aluminum exports—measures that could take effect as soon as July 2025 following an ongoing public consultation.

Market watchers saw the diplomatic hesitation as both prudent and concerning. "When two elephants fight, the grass suffers," remarked one Brussels-based trade lawyer who requested anonymity due to client sensitivities. "But right now, both sides seem to be measuring their steps carefully."

Economic Ripples Begin

The Commission's spring economic forecast paints a sobering picture, with real GDP growth projections for 2025 revised downward to 1.1% across the bloc—a dip attributed partly to trade-related uncertainties. While the tariffs have accelerated disinflation toward ECB targets, analysts note the potential for lasting supply chain disruptions in critical sectors.

Automotive trade groups on both continents have grown increasingly vocal. "These tariffs represent a $6 billion annual tax on European automakers," contended a senior industry lobbyist during a Frankfurt roundtable. U.S. counterparts countered that domestic manufacturers require protection against "market-distorting subsidies"—a familiar refrain from the Trump-era trade playbook.

What Comes Next

All eyes now turn to the impending call between EU Trade Commissioner Valdis Dombrovskis and U.S. Trade Representative Katherine Tai. Though neither office would confirm the discussion's agenda, sources suggest it may explore alternatives to reciprocal tariffs, potentially through the EU-U.S. Trade and Technology Council framework.

As of Tuesday afternoon, DAX automotive stocks showed mixed reactions, with Volkswagen shares down 1.2% while BMW gained 0.4%—a reflection, perhaps, of divergent exposure to U.S. markets. Aluminum producers faced steeper declines across European bourses.

The Commission press office declined to comment when reached for this story.