The European Union estimates that the first wave of Donald Trump’s steel and aluminum tariffs will hit as much as €28 billion ($29.3 billion) of the bloc’s exports in what would be a massive escalation in the US president’s trade war.

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.

European luxury goods makers say they could draw on pricing power to offset the cost of any tariffs imposed by U.S. President Donald Trump, but analysts say some brands may have limited room to hike prices.

The European Union estimated that the first wave of tariffs on steel and aluminium imposed by US President Donald Trump will result in a hit to EU exports worth up to €28 billion (approx. US$29.3 billion).

European leaders said they would respond firmly to higher levies on steel and aluminum, but they had yet to say what that retaliation would look like.

Members of the Stoxx Europe 600 Index have beaten fourth-quarter profit estimates by 4% on an equal-weighted basis, “well above” the historical average, according to data from Goldman Sachs Group Inc. Yet, full-year 2025 projections have been reduced by about 0.5% since the beginning of the year, the figures show.

The amount of goods would be about four times larger than the last time Trump targeted the bloc’s metals sector.