US threatens 25% import tariffs on EU food products

The potential introduction of 25% US import tariffs on European products could significantly disrupt trade flows in the food and agriculture sector. According to a recent report by RaboResearch, agricultural machinery and processed food products are expected to be hit the hardest. Companies in these sectors are advised to consider strategic responses. These tariffs could impact not only trade between the EU and the US but also shift global trade dynamics.

Trade balance between the EU and US

In 2024, the EU exported €38 billion worth of food and agricultural products to the US, while imports from the US amounted to €14 billion. This gives the EU a substantial trade surplus. Exports to the US mainly consist of high-value products such as essential oils, wine, olive oil, and dairy. In contrast, the US primarily exports lower-value commodities such as soy and soy products to the EU.

"From the EU’s perspective, the US is a key export market, while for the US, the EU is more of a supplier," says Barend Bekamp, Senior Specialist Food & Agriculture at RaboResearch.

Impact on sectors and possible strategies

According to RaboResearch, sectors with a strong market position in the US and high price sensitivity will be most affected. The agricultural machinery industry is expected to be particularly vulnerable, as American farmers may opt for domestic alternatives. Processed food products, such as beverages, pasta, and dairy, could face a moderate impact, depending on price elasticity within these categories.

Bekamp outlines several strategic options for EU businesses: maintaining prices and passing costs on to US importers, lowering prices to stay competitive, exiting the US market, adjusting supply chains, or investing in US-based production. The best course of action depends on a company’s international footprint and the price sensitivity of its products.

Rabobank.com