The Trade War Continues, Heading Toward a Very Heated July

 Translated by: Era Stojani.

The OECD forecasts contained in the latest Economic Outlook have highlighted a negative trend in economic performance for the coming years, revealing a significantly worsening global economic picture compared to last year's estimates.

The situation of extreme uncertainty, primarily political but consequently also economic, is the main impediment to stable and robust economic growth. Faced with the current context characterized by high trade barriers, further conditioned by a restrictive financial situation and a significant drop in confidence, global growth prospects have experienced a sharp slowdown, falling from 3.3% in 2024 to 2.9% in both 2025 and 2026.

This trend can be practically summarized by what is happening economically, but especially politically, between the US and the EU. The worrying back-and-forth that has emerged in recent months following the introduction of tariffs by the Trump administration last April has seen no improvements, but rather peaks of crisis, which have caused worrying repercussions on markets.

It's quite evident that a certain degree of frustration is lingering within the European Institutions, now barely concealed in the face of economic trends, but even more so towards the political stance imposed by Trump on a trade war that risks only creating victims on both sides.

The negotiations led by EU Trade Commissioner Sefcovic don't even seem like a failure, but rather stagnate in a situation of total inconclusiveness, primarily due to Trump's erratic shifts, which in most cases tend to even catch US officials involved in the negotiations off guard, effectively rendering all efforts futile.

This state of affairs appears as schizophrenic as it is confusing, and for now seems to find no way out, despite what was reported in recent days by the European Commission spokesperson for trade, Olof Gill, who had given positive feedback on technical-level negotiations, calling them very constructive, only to immediately backtrack following Trump's announcement of a doubling of steel and aluminum tariffs.

A threat that fortunately remained just that, as the introduction of 50% tariffs on all goods, which was supposed to take effect from June 1st, closing the 90-day suspension window, was averted by a phone call with Commission President Ursula von der Leyen. However, it also highlighted even more the nervousness within the European Institutions.

The perception that the situation is further escalating is primarily given by the still veiled threat from the EU to introduce retaliatory measures well before mid-July, the foreseen date until which tariff countermeasures are frozen pending negotiations. Currently, not only is a first package of retaliatory measures worth 26 billion against the 25% steel and aluminum tariffs imposed by the US administration on the table, but also a much more significant package of 95 billion in case of failure to reach an agreement between the parties.

This stalemate is dangerously pushing negotiations closer to July, with the consequences this could generate for global trade, and it testifies to the level of fragility and insecurity affecting international relations at this moment. A situation that, as highlighted, could rapidly change in the coming hours during the, Paris negotiations although recent months' precedents do not bode well.

Mondo Internazionale APS - Riproduzione Riservata 2025