The EU–US transatlantic relationship has entered a new phase of volatility after the US Supreme Court struck down President Trump’s global tariff deals. The ruling casts fresh doubt over the 15% tariff rate on EU exports negotiated last summer, prompting the European Parliament to freeze the ratification of the new EU–US Trade Agreement pending legal clarity. In response to the court’s ruling, Donald Trump initially threatened to raise global tariffs to 15%, but instead imposed a temporary 10% rate set to expire on 24 July unless Congress renews it.
For Brussels, the implications go far beyond tariffs. With EU–US trade surpassing €1.6 trillion annually, rising legal uncertainty and renewed tariff threats amid geopolitical crises have strained not only economic ties but also the broader traditional alliance.
Implications for European startups
Amid this geoeconomic upheaval, and with President Trump previously threatening to impose additional tariffs on several European countries in his bid to take Greenland, how has the new EU–US trade deal and the ongoing uncertainty impacted transatlantic trade and, specifically, European startups?
Since July 2025, EU exports to the US have taken a hit, weighed down by higher US tariffs and a stronger euro, making European goods more expensive for US consumers. UN Comtrade data shows that in the third quarter of 2025, EU exports to the US fell sharply by 25% to €147.1 billion compared to the previous quarter. That figure had been temporarily inflated by a March surge, as US firms rushed to import European goods ahead of new tariffs taking effect on 1 August. The overall impact of the tariff agreement is stark: the EU’s goods surplus with the US has almost halved, dropping from €81 billion in the first quarter of 2025 to €41 billion in the third quarter.
Irish and European exporters to the US are impacted by the tariffs in several ways, with startups in trade-dependent sectors, including hardware, machinery, chemicals and pharmaceuticals, being particularly vulnerable. Tariffs increase costs, squeezing profit margins and disrupting supply chains, which in turn can impact cash flow, as Enterprise Ireland has warned. Rising prices and uncertainty may prompt US buyers to seek alternative suppliers, leaving European companies at a disadvantage compared to non-tariffed competitors. In response, Enterprise Ireland has introduced targeted grants for Irish exporters, both for market research and new market validation, to help them adapt strategically and diversify their markets.
Trade tensions have also revealed that access to critical technologies is no longer a given. The EU’s growing AI market, characterised by a proliferation of startups, is heavily dependent on US hyperscalers for cloud and AI services, representing a structural vulnerability. Moreover, the EU has faced an aggressive response as it has sought to regulate big tech platforms under the EU’s Digital Services Act, the Digital Markets Act and the AI Act. This has resulted in additional US tariff threats, with European regulators and service providers, including tech companies, also being targeted.
A climate of investment uncertainty
This volatile environment creates uncertainty, leading venture capital (VC) funds to make more cautious decisions, delay investments or even withdraw from Europe. In the first quarter of 2025, the US share of total European deal value fell to 46.9%, down nearly 4% from the previous quarter, according to PitchBook data. The overall volume of VC deals in Europe dropped to its second-lowest level in a decade in 2025, according to KPMG.
This particularly affects startups in less mature ecosystems that rely on external capital, especially from the US, to close funding gaps, often in the later financing stages. With the US already investing at least four times more VC per capita than Europe, there is a real risk of a widening innovation gap.
Against this backdrop, initiatives for greater harmonisation across EU member states are critical to alleviating the impact of trade tensions and tariffs. The Capital Markets Union aims to expand financing options for European startups and make the EU a safer and more attractive place to invest in the long term. Meanwhile, the €5 billion Scaleup Europe Fund, expected to launch in spring 2026, seeks to address shortages in late-stage growth capital for strategic deep-tech companies.
Transatlantic relationship no longer assured
The transatlantic relationship remains economically vital, but this once close relationship can no longer be taken as a given. This is a stark and painful lesson for Europe. Diversification is sensible, but it comes with its own political and economic trade-offs, and this was acutely reflected in the Mercosur Partnership Agreement negotiations.
A thriving startup ecosystem is crucial to Europe’s economic growth, competitiveness and resilience to global trade shocks. In its Startup and Scaleup Strategy from May 2025, the European Commission set out its role, together with the European External Action Service and Member States, in supporting startups to access global markets through trade agreements, EU Delegations and dedicated EU tools such as the Access2Markets portal. Innovative startup solutions also need to be integrated into the value chains of Global Gateway.
The moment is ripe for startups to consider the opportunities of diversification and how they can gain a strategic edge in Europe.
As Ireland prepares to host its eighth Presidency of the Council of the EU in the latter half of this year, trade relations are set to dominate the agenda. Given Ireland’s unique relationship with the US, it will have to continue to balance strained US relations within a broader European agenda as it assumes EU leadership. If Ireland’s approach is politically shrewd, it may well achieve this for the benefit of all Europeans.
Read the orginal article: https://www.eu-startups.com/2026/03/trade-tensions-and-tariffs-what-they-mean-for-europes-startups-noelle-o-connell/
