In mid-July 2025, the European Commission unusually released a 202-page list of retaliatory tariffs against the United States, sending shockwaves through global markets. The document is widely seen as a “comprehensive response” to the United States’ policies on green technology subsidies and industrial protectionism, with its release coming amid the EU’s long-standing strong objections to the unfair competition caused by the U.S. Inflation Reduction Act (IRA). The list covers multiple sectors, including automobiles, batteries, chips, agricultural products, and consumer goods, aiming to curb the impact of U.S. manufacturing policies on European companies by imposing tariffs or import restrictions on U.S. products worth billions of dollars.
Green energy sector takes center stage, EU’s pressure tactics evident
According to publicly available information, one of the key targets of the EU’s countermeasures is the U.S. government’s large-scale subsidy policies for electric vehicles, clean batteries, and photovoltaic technology under the IRA. Brussels argues that these subsidies effectively encourage U.S. companies to relocate back to the U.S., squeezing out European firms in the green energy sector. EU Commission Vice-President Valdis Dombrovskis stated at a press conference: “We support the green transition, but not at the expense of fair competition.” He also emphasized that the EU will not stand idly by as transatlantic industrial imbalances continue to widen, especially in core strategic sectors, where the EU has the right to defend its industrial interests through reciprocal and lawful measures.
Businesses are deeply concerned, with cross-border supply chains at risk of further disruption
The EU’s 202-page retaliatory list, once published, sparked significant attention among multinational companies in Europe and the US. The Federation of German Industries (BDI) stated that these measures could trigger unintended chain reactions for European exporters, particularly manufacturers reliant on US raw materials or components. Some US-based companies with factories or R&D centers in Europe are worried that the EU’s retaliatory tariffs will increase operational costs and weaken market expectations. Meanwhile, US agricultural and consumer goods exporters are also expressing concerns about losing access to Europe’s high-end consumer market. Reuters noted that if such trade frictions continue to escalate, it could lead companies to adopt a more conservative approach in decision-making, thereby hindering the recovery of global supply chains.
Expert view: countermeasures are both a warning and a bargaining chip
Several trade experts believe that the EU’s release of the countermeasure list is more of a “tactical deterrent.” While the list is detailed, most of the measures have not yet been formally implemented and still require approval through member state votes. This approach sends two signals: on one hand, it demonstrates that the EU has the means to defend its interests, and on the other hand, it leaves room for future negotiations with the U.S. A senior researcher at the Bruegel Institute noted: “The EU has traditionally favored rules and negotiations in international trade. The release of this list is primarily aimed at breaking the US’s habit of acting unilaterally.” He also mentioned that the EU’s move will force the US to rethink the international spillover effects of green subsidies and their cascading impacts on global partners.
The three-way relationship between China, the US, and the EU may be reshuffled
It is worth noting that the EU’s strong countermeasures are not only a response to the US’s unilateral policies but also imply a realignment of the future three-way relationship between China, the US, and the EU. Against the backdrop of unresolved US-China trade frictions and increasingly close EU-China economic and trade ties, the EU may seek to enhance its negotiating position with China in emerging industries by increasing pressure on the US. An internal briefing from the European Parliament indicates that in sectors such as semiconductors, lithium batteries, and rare earths, the EU aims to “diversify sources” to avoid being overly constrained by either the US or China. China, meanwhile, may gain new cooperation opportunities amid EU-US divisions, such as strengthening technical standards exchanges and green energy collaboration. If the EU-China Investment Agreement is restarted, it could also become a new diplomatic bargaining chip for the EU.
Conclusion: As the rules-based game enters uncharted waters, what lies ahead for globalization?
Judging from the content and wording of the EU’s latest retaliatory measures, transatlantic trade relations are undergoing subtle yet significant changes. The once-stable partnership model is now being challenged by a new wave of industrial protectionism and strategic competition. The next phase of globalization is unlikely to be about simple market integration but will instead involve complex strategic competition at the institutional, rule-based, and technological levels. While the EU’s move is unlikely to trigger a full-scale trade war, it undoubtedly sends a powerful signal on the international stage. Finding the right balance between protecting domestic interests and maintaining global cooperation will be the most critical challenge for Europe and the US moving forward.
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