The trade threats could reduce exports to the United States and dampen investment in Europe, dealing a blow to growth at a time when the continent is already facing a lackluster economy.

He’s made clear that includes value-added taxes, or VATs, which is the way most countries—including the entire rich world apart from the United States—taxes consumption. Still, Trump blames the VAT for the U.S. trade deficit with the European Union, which hit $236 billion in 2024, according to the Census Bureau, second only to China.

The European Commission said on Friday it would react "firmly and immediately" against tariff increases resulting from U.S. President Donald Trump's proposed reciprocal trade policy, which it labelled unjustified and a step in the wrong direction.