Even as European Union negotiators redoubled efforts to secure a trade deal with the United States, businesses in Europe face prolonged uncertainty that makes it difficult — and costly — for them to plan for the future.
The threat on Saturday from President Trump of a 30 percent tax on goods imported from the European Union leaves businesses facing tariff levels not seen since the end of the 19th century. Worse, many say, is that they find themselves in limbo, unable to make decisions on strategy, hiring and investments.
“Let’s be honest, an idea of 30 percent tariff rate is effectively prohibitive to the mutual trade,” Maros Sefcovic, the European Union’s trade commissioner, told reporters in Brussels on Monday. “The current uncertainty caused by unjustified tariffs cannot persist indefinitely,” he added.
The European Union is the biggest exporter to the United States, accounting for $600 billion of $3.2 trillion in annual U.S. imports.
Mr. Trump’s latest threat is more severe than what European businesses expected. Many had been operating on the assumption that European negotiators would cement a deal that included Mr. Trump’s initial 10 percent tariff, while working to win concessions for crucial sectors including cars, steel and aluminum. Since April, he has threatened to raise the tariff on European goods to 20 percent, then 50 percent, before pulling back, confounding executives.
Companies ultimately expect a better deal, but the costs of the zigzag tariff policy are mounting with each day that passes ahead of the new Aug. 1 deadline set by Mr. Trump.
“Even if negotiations ultimately avert the highest new tariffs, the longer it takes to get there, the more economic damage will accumulate,” said Salomon Fiedler, an economist at Berenberg Bank.
Many companies are wary of complaining publicly, especially European brands that are popular among American consumers. Executives fear they may become a target of Mr. Trump’s wrath on social media.
Their business partners in the United States are equally fearful of drawing Mr. Trump’s attention, should they gripe about the higher prices they may have to pay — and likely pass onto American consumers.
“From a P.R. standpoint, companies don’t want to be caught in social media posts,” Nadia Lovell, senior U.S. equity strategist at UBS, said in a media call last week.
David Deissner, director of the Foundation for Family Businesses, which represents some 600 firms in Germany, said that companies are telling him that the situation is like constantly “switching from the brake to the gas.”.
The confusion has European executives facing a daily barrage of questions about where and how to produce products destined for the United States, and whether to absorb some of the cost of tariffs themselves to share the pain with American clients.
“Different companies in the same room say different things about what they are producing and on how they are producing it” to avoid the sting of tariffs, said Eleonora Catella, deputy director for international affairs at BusinessEurope, a lobby group representing national business federations across the continent.
In particular, firms that make machinery, whether for airplanes, cars or refrigerators, have been considering moving some production to countries with a lower tariff, or sending unfinished products for assembly in the United States, Ms. Catella said.
But they also fear that the countries where they move production could suddenly face higher tariffs, Ms. Catella added. “They know that this is not the end of the story,” she said.
Mr. Trump’s latest threat risks deeper damage to the European economy, even as companies look for ways to blunt the impact.
The European Trade Union Confederation warned on Monday that 20 percent tariffs could put at least 700,000 jobs at risk in the European Union, and that doesn’t include the sector-specific tariffs on cars, steel and more. If Mr. Trump’s 30 percent tariff on European goods took effect, the impact “would be even more dramatic,” the group said.
In France, exports to the United States could slump as much as 2 percent, the Institute for Macroeconomic and International Policies in Paris said in a report, especially if there are “successive and contradictory announcements from the U.S. administration.” The French government is pushing Europe to accelerate trade deals with several countries in Asia and Australia. But even if French companies are able to sell more elsewhere, that “does not compensate for the loss of the American market,” the study warned.
Germany’s economy ministry said on Monday that tariffs were expected to be a drag on German growth in the second half of the year. German exports to the United States fell more than 13 percent in May from a year earlier.
What’s more, many companies assume that even if a deal is sealed before Aug. 1, avoiding higher tariffs, it could yet be undone by a social media post from Mr. Trump at any moment.
“The tariff roller coaster ride is going to continue,” said Inga Fechner, senior economist for global trade at ING Bank. “If Trump is not happy with trade practices, he can always threaten more tariffs.”
Jeanna Smialek contributed reporting from Brussels.
Liz Alderman is the chief European business correspondent, writing about economic, social and policy developments around Europe.
Melissa Eddy is based in Berlin and reports on Germany’s politics, businesses and its economy.
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