One Year of Trump Tariff Chaos: EU Deal on the Brink, Uncertainty Grows Among German Companies

That the situation can tip over at any time was demonstrated most recently by the example of Canada. How inconstant Trump is, he demonstrated recently using the neighboring country as the example: after imposing a tariff of 25 percent on nearly all goods last year, Trump at times threatened a rate of 100 percent. The background, from the US government's perspective, was allegedly that the neighboring country is doing too little to combat drug smuggling across the border. The escalation spiral made clear that even existing agreements no longer provide a reliable framework.

The Federation of German Industries (BDI) and the German Association of the Automotive Industry (VDA) are observing the developments with growing concern. BDI economist Wolfgang Niedermark, one of the most distinguished observers of transatlantic economic relations, had repeatedly pointed to the risks of an erratic tariff policy. The experiences with Canada showed that even agreements that appear binding can become worthless within days. "What remains of the EU-US tariff deal after one year" – as one industry representative put it – is essentially a new normal of uncertainty.

Industry Under Pressure to Adapt

The EU Commission in Brussels responded to the latest escalation steps with diplomatic restraint, but signaled willingness to negotiate. At the same time, EU trade commissioners are preparing for possible retaliatory tariffs should the USA target additional sectors. The question of whether the hard-negotiated tariff deal will hold is, in the assessment of observers, less dependent on the treaty text than on the daily disposition of the US president.

Particularly affected are sectors with a high export share to the USA: the automotive industry, mechanical engineering, and chemicals. Suppliers in southern Germany and North Rhine-Westphalia are reporting postponed investment decisions and a decline in orders, because US customers are reorganizing supply chains or withdrawing from Europe altogether. The US government had pushed the original deal in the summer of 2025, arguing, among other things, that the tariffs secured American jobs.

Brussels Between Diplomacy and Retaliation

Under the impression of the latest steps, the discussion about trade policy counter-strategies has gained momentum. Brussels is reportedly examining an expansion of retaliatory tariffs to additional US products and is considering forming a coordinated western trade bloc together with Canada and Mexico. Industry representatives are demanding that the EU strengthen its negotiating position through more of its own industrial policy.

For the coming months, observers expect a continuation of the interplay of threats, partial agreements, and walk-backs. The Turnberry deal, which is considered in the background as a prime example of unilaterally terminable agreements, has become a symbol of politicized trade policy in the executive suites of German corporations. The economic consequences – such as declining margins, rising logistics costs, and a falling investment ratio – will become visible in the coming quarterly reports.

Meanwhile, the insight is growing that a return to reliable framework conditions is only possible through long-term contracts and institutional safeguards. The EU is relying on multilateral forums such as the WTO, whose dispute settlement bodies have recently been utilized more heavily again. But until Washington demonstrates a line of reliability, many German companies remain in a kind of defensive standstill.

Outlook: Reliability as an Open Demand

At the beginning of 2026, German exporters had still been counting on the EU-US tariff deal as a anchor of stability. This hope has, in the view of many market participants, given way to a new reality: the US market remains accessible, but can be conditioned at any time. Industry now calculates with tariff rates as a variable factor, no longer as a fixed cost factor – a paradigm shift whose political solution remains pending.