Whilst the US continues to close its doors, the EU is seeking new trade routes
The global trade climate remains challenging
Doing business internationally has become more complex in recent years. The United States has become more protectionist and is increasingly using import tariffs as a tool of its industrial, security and foreign policies. This leads to higher costs, greater uncertainty and more significant compliance challenges for companies that depend on the US market or on US-oriented supply chains.
The European Union is charting a different course. Whilst the US is raising trade barriers, the EU is seeking to keep trade channels open and expand them further. The recent EU–Mercosur trade agreement and progress in other trade negotiations show that Brussels is actively working on alternatives for a world in which access to the US market is no longer a given. This, in turn, is creating new export opportunities.
New US import tariffs are less severe than feared for the EU, but uncertainty remains
On 24 July 2026, new US tariffs of between 10% and 12.5% came into force for sixty of America’s key trading partners, including the EU. The new tariffs replace the temporary 10 per cent regime that was introduced after the US Supreme Court had earlier this year declared the reciprocal tariffs due to come into force in April 2025 invalid. They should therefore be seen primarily as a continuation of the existing protectionist policy and not as a new escalation.
The new tariffs are formally linked to US concerns about forced labour – against which the affected countries are said to be taking insufficient action – and alleged unfair trade practices. As they are based on Section 301 of the Trade Act of 1974, they have a broader legal basis than previous tariffs imposed under both the IEEPA emergency legislation (the retaliatory tariffs of April 2025) and Section 122 (those of February 2026). We therefore expect the new tariffs to remain in force for the time being and that legal proceedings – such as the case brought by 25 US states in early August – will take a long time.
According to Fitch, the effective US import tariff has fallen since the new regime came into force, from 9.4 per cent at the end of February to 7.4 per cent. This is because more products have been exempted from the tariffs, including certain foodstuffs, beverages and aerospace components that the US does not produce itself, and because Fitch is now using more recent import data (2026 instead of 2024).
For the EU, the new measures appear to be more favourable than expected. The EU remains subject to the 10 per cent tariff, similar to Canada, India, Mexico and the UK, and lower than the 15 per cent provided for under the so-called Turnberry Agreement between the EU and the US of July 2025. Furthermore, for the EU (and also for Taiwan), the new tariff does not apply on top of the most-favoured-nation (MFN) tariff, as is the case for the other countries, but both are capped jointly at 10 per cent. A similar system applies to Japan, South Korea and Switzerland, but the maximum rate is 12.5 per cent. This is more favourable than for the other countries subject to the 12.5 per cent tariff, including China, where this tariff is levied on top of the MFN tariff.
Nevertheless, uncertainty for European exporters remains considerable. The US government is investigating potential overcapacity in sixteen countries, including the EU, under Section 301. This investigation focuses on strategic sectors such as electric vehicles, steel, aluminium, solar panels, semiconductors and consumer electronics. In addition, new sectoral investigations under Section 232 – which currently cover tariffs of 50 per cent on steel, aluminium, iron and copper, for example – could lead to further trade restrictions. The US has already threatened on several occasions to impose tariffs on medicines and, more recently, on drones. Further tariff increases are therefore still possible, including for European exporters.
EU–Mercosur agreement offers a more positive trade narrative
Faced with rising geopolitical tensions and the threat of new sector-specific trade measures from the US, the EU remains committed to trade liberalisation. The EU–Mercosur agreement is the prime example of this. After more than 25 years of negotiations, the EU and four Mercosur countries – Argentina, Brazil, Paraguay and Uruguay – signed their partnership agreement on 17 January 2026. As full ratification takes a long time, the European Commission decided on 27 February to proceed with the provisional application of the trade section. This came into force on 1 May, following approval by the European Council.
Since then, exporters have been able to benefit from the gradual phasing out of tariffs on around 91 per cent of trade in goods between the two blocs, the simplification of customs procedures, the harmonisation of technical standards and improved access to public procurement. Geographical indications are also better protected. This creates new opportunities particularly for manufacturers of machinery, vehicles and chemical products, as they can now benefit from the significantly lower import tariffs currently in place within Mercosur. The Netherlands benefits not only as an exporter, but also as a logistics gateway to Europe. Around 26 per cent of Mercosur exports to the EU enter via Dutch ports. Furthermore, Dutch exports to Mercosur have grown faster than total Dutch goods exports in recent years.
The agreement also supports the European strategy to further diversify trading partners, raw material supplies and supply chains. Mercosur not only offers access to a market of over 270 million consumers, but is also a potential partner for energy and critical raw materials. Argentina has large lithium reserves, whilst Brazil is rich in graphite, manganese, nickel, bauxite and rare earth elements, amongst other things – raw materials that are essential for batteries, clean technology and the energy transition.
The EU is not only seeking new trade relationships, but is also deepening existing ones
In January 2025, after nearly nine years of negotiations, the EU and Mexico reached an agreement on further deepening their political and economic cooperation. That agreement was signed on 22 May this year. As with Mercosur, a separate provisional trade agreement has been opted for, which can enter into force earlier than the broader modernised global agreement. Following approval by the European Parliament and the European Council, European exporters will gain better access to a market of over 130 million consumers.
And is also turning her attention to Asia and the Pacific
Negotiations on a free trade agreement with Indonesia were concluded at the end of 2025, followed by agreements with India and Australia in 2026. These agreements are currently undergoing legal scrutiny and are being translated into the official EU languages. Once approved by the European Council, they can be signed, followed by ratification and implementation.
In addition, at the end of 2025, the EU launched a trade and investment dialogue with the CPTPP, a trade bloc comprising twelve countries around the Pacific, including Australia, Canada, Chile, Japan, Mexico, Vietnam and, since 2024, the United Kingdom. As well as cooperating on trade diversification and security of supply, both blocs also aim to work towards strengthening the multilateral trading system, including the reform of the World Trade Organisation. However, the absence of the US and China – neither of which are members of the CPTPP – is likely to limit the potential impact of EU-CPTPP agreements on global trade.
EU initiatives broaden export markets and strengthen resilience
All these EU initiatives form part of a broader strategy to diversify trade flows and reduce dependencies. Through closer cooperation with like-minded economies, European companies can broaden their export markets and make their supply chains more resilient. In doing so, the participating countries are demonstrating to the US – and also to China – that they remain committed to a rules-based trading order. Even though these initiatives do not provide a quick fix for reduced access to the US market, they do show that the EU continues to actively seek out new trading partners.
Greetje Frankena- Deputy Head Economic Research Department
Dana Bodnar – Senior Economist