At the start of April 2025, US President Donald Trump announced tariffs on nearly every US trading partner.
The initial rates caused confusion and panic, which led the markets to react negatively. The rates were then adjusted, and in some cases, a 90-day pause on the tariffs came into effect. But for most countries, a 10% tariff was implemented.
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The European Union was one of the entities that initially faced a high tariff. Originally, a 20% rate was imposed on EU exports. But after renegotiating, the rate was reduced to 10%. Meanwhile, Ukraine was informed that Ukrainian exports would face a 10% rate.
From the EU, the US imported electrical machinery and equipment, aircraft and special parts, and non-railway vehicles. The total value of goods purchased by the US from the EU in 2024 was $605.8 billion. As for exports, the EU purchased machinery, appliances, and parts from America. The US sold $370.2 billion in goods in 2024.
Meanwhile, Ukraine sold $1.2 billion in goods to the United States in 2024. This included iron and steel, and various agricultural goods. As for imports, the Ukrainians purchased $2.9 billion in goods from the US in 2024. This included non-railway vehicles, power equipment, and electrical machinery.
US tariffs will make trade more difficult for countries. It may even lead to a global recession. But there may be a way to counteract some of the impacts of tariffs.
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For example, to reduce the financial burden of this American policy, the EU and Ukraine could introduce further avenues for trade. The EU and Ukraine should not abandon their trade relationship with the United States, but altering their trade policies may help their economies as they seek to avoid the full economic effect of American tariffs.
The proposal would extend trade relations between the EU and Ukraine. Currently, the EU and Ukraine have an Association Agreement, which was signed in June 2014 and implemented in September 2017. The agreement saw the EU and Ukraine strengthen their diplomatic ties.
There is also an overlap in trade relations between the EU and Ukraine as they relate to the United States. For example, the EU purchases billions of dollars of agricultural goods as well as iron and steel from Ukraine. The United States also purchases such goods from Ukraine. Meanwhile, the Ukrainians bought non-railway vehicles as well as electrical machinery from the EU and America.
In other words, if the EU and Ukraine wanted to enhance their trade relations by playing to their strengths, they could opt to sell more products to each other rather than the United States. It would avoid US tariffs, and such an avenue would be beneficial.
First, it would showcase Ukraine’s value as an important partner on the European continent. To date, several critics have been skeptical about Ukraine’s EU membership aspirations. They have questioned Ukraine’s ability to contribute to the EU, believing that Ukraine’s economic issues would burden the organization. In addition, some critics view Ukraine as a country that would obtain benefits from the EU without having much to contribute.
Increasing trade relations between the EU and Ukraine would prove these critics wrong as it would highlight the various goods and services Ukraine offers. It would reduce European prices on agricultural products as well as iron and steel, thus making things more affordable on the European continent.
Second, increasing trade relations will help Ukraine achieve its EU membership aspirations. Since 2014, the Ukrainian government has undergone various efforts to reform its government, institutions, and economy. Ukraine was rewarded for its work by being granted visa-free travel to the EU in 2017. Then, in 2022, Ukraine was given EU candidate status.
But Ukraine can further these efforts. Increased trade between the EU and Ukraine would help Ukraine further align with European norms and standards. Pursuing closer trade relations would help Ukraine bring its “rules in line with those of the EU in certain industrial sectors and agricultural products,” thus further modernizing the Ukrainian state.
Finally, increasing trade between the EU and Ukraine would reduce the financial burden of American tariffs.
How would economies be impacted? When a tariff is implemented, consumer spending power decreases as items become more expensive and individuals are more hesitant to purchase goods. These actions then lead to the slowing of economic growth. Furthermore, tariffs can lead to inflation, meaning that there are greater consequences for the economy.
To reduce the negative impact of the recent US policy, the EU and Ukraine could increase their trade. Continued trade would help boost their economies without having to pay financial penalties on the goods and services sold. In addition, the EU and Ukraine have already cut tariffs, thus making trade between the two parties easier.
In other words, reducing EU and Ukrainian dependence on American imports may help them counter the impact of American tariffs. It will ease rising prices on goods, and it may slow inflation in Europe.
No one is certain what the future will hold, and it is unclear how the future global economic landscape will unfold. Nonetheless, the EU and Ukraine should explore ways to increase their trade. It might just save their economies.
The views expressed in this article are the author’s and not necessarily those of Kyiv Post.