TRUMP’S TRADE WAR: EU EXPORTS AT RISK AND ALTERNATIVE MARKETS

This paper examines the European Union (EU)’s response to President Trump’s 2025 imposition of tariffs on imports of aluminum and steel from the EU. The EU’s response includes bargaining, politically targeted tariffs and internal substitution measures. The EU is not considering external substitution measures, such as alternative export markets for aluminum and steel products threatened. In this paper, we argue that this is an omission. The EU’s response should be twofold: one, at the EU level, to apply retaliatory tariffs and negotiations, and two, to support country-level efforts to minimize the impact of tariffs, including external substitution. We use the case of the Netherlands to illustrate the usefulness of our recommended approach. Using the CEPII BACI reconciled UN COMTRADE data we calculate time-weighted Revealed Comparative Advantage (RCA tw ) and Revealed Trade Advantage (RTA tw ) measures to assess the risk to the Netherlands’ exports to the USA. For high-risk products, we then use a data filtering process to identify alternative export markets. Our findings indicate that while most of the Netherlands’ exports to the USA are at low-to-medium risk, a smaller portion is at high risk. For aluminum and steel products, the high-risk products face exports-at-risk of US$ 245 million, much lower than some current estimates. For these, we identify alternative export opportunities outside the USA and EU. The best opportunities, valued at US$ 12 billion, are in China, Mexico, Canada, Malaysia and India. An implication is that the USA’s trade policies could push the Netherlands and the wider EU toward closer economic ties with other global players, potentially weakening the USA’s geopolitical standing.