"Many companies in the EU's internal market would be happy to have tariffs like only the 25 percent threatened by Trump. They have to contend with hurdles that restrict trade much more severely.
US President Donald Trump probably doesn't even know what tariffs he will impose on the EU in addition to the car tariffs on the "Liberation Day" he has proclaimed next Wednesday. The EU Commission is preparing for the worst – that much is clear. "25 percent or more on everything" is considered the most likely scenario. Many in Brussels still hope that Trump will be willing to negotiate after the global tariff crackdown. If a tariff war ensues, it will have noticeable consequences for transatlantic trade and thus also for prosperity in Europe.
Europeans therefore have every reason to look elsewhere for unnecessary trade barriers. Their attention is focused on old and new partners around the world. Yet there is plenty to do on their own doorstep.
According to the International Monetary Fund (IMF), the numerous non-tariff barriers that continue to hinder trade within the EU itself correspond to an average tariff of 44 percent between individual member states.
Trump's tariffs so far seem downright modest in comparison. And that only reflects trade in goods excluding agricultural products.
According to the IMF, the barriers to trade in services correspond to a tariff of 110 percent.
The figures, based on the ratio of domestic to intra-European trade flows, appear very high, says Niclas Poitiers of the Brussels-based think tank Bruegel. Other studies arrive at lower costs resulting from intra-European trade barriers. But this changes little in the overall diagnosis: Even more than 30 years after its much-celebrated founding, the European single market is at best a "half-baked affair," says Jacques Pelkmans of the Centre for European Policy Studies (CEPS).
Anyone who wants to send goods or employees from Germany to other European countries can tell you all about it. "It's an extremely irregular system with very high demands," says Armin Schmiedeberg, who heads the supervisory boards of three family-run, internationally active medium-sized companies. Reporting requirements, insurance obligations, recognition of master craftsman examinations and professional qualifications, wage regulations – all of this is extremely complicated. Even if an employee from the Black Forest is only supposed to transfer to Austria or France for a few days, a lot of time is spent on applications, inquiries, and other bureaucratic procedures.
Take France, for example: There, authorities often only provide information in French, minimum wage regulations vary depending on the industry and region – and the documents that employees must carry abroad conflict with EU data protection regulations (GDPR).
By no means every clerk in the company is able to keep track of all this. "Large companies can obtain legal support, while smaller ones prefer not to send employees on assignments," says Schmiedeberg.
He himself was once send to Italy for a year. The result: Despite double taxation agreements, he initially had to pay the full amount of taxes in both countries, and half of the amount was only returned to his account years later.
There are long lists of examples of such trade barriers. The European Commission regularly publishes lists with dozens of examples. There are studies by the European Parliament. Last year, former Italian Prime Minister Enrico Letta presented his own report on the EU internal market on behalf of the EU member states. The EU internal market, or rather its imperfections, also plays an important role in the much-noticed report on competitiveness presented by his compatriot Mario Draghi.
The biggest obstacles in the internal market for goods traditionally occur in the trade of textiles, food, building materials, and electrical goods.
Many of them seem trivial at first glance. The difference is in the sum. Food must be labeled in a different language from country to country, and national nutrition labels are becoming increasingly common. Food must be delivered at a different temperature in one country than in another. Often, various regulations concerning health, safety, or environmental protection are involved. In addition to the European CE marking (which indicates that a product meets all EU-wide safety requirements), electrical devices must also bear a reference to the various local disposal regulations.
The situation is even more complicated with medical devices such as surgical robots, which, although tested and used in one EU country, may still have to undergo a complete approval process depending on the country.
Even the trade in waste often fails. It's because every country defines waste differently or has different requirements. The devil is often in the details. In Italy, companies can only contact authorities via a digital certificate, which is difficult for foreign companies to obtain. In Spain, payments to social security authorities must be made from a Spanish account, while payments to tax authorities are also possible from foreign accounts.
When entrepreneur Birgit Putz from Viöl, Schleswig-Holstein, wants to export her sheet cleaning machines for bakeries within the EU, packaging is the hurdle. Almost every country has its own rules, fees, and labeling requirements. It's particularly expensive for the entrepreneur in Austria, she says. Even if she only exports one machine to the country, she has to pay the annual service fee of €570 applicable in Austria for the 8.15 kilograms of cardboard and one kilogram of plastic packaging material, plus €50 for an authorized representative and a disposal fee of €150, a total of €770.
"Small and medium-sized companies like Birgit Putz's cannot afford to have a single person dedicated to packaging issues," says Helena Melnikov, Managing Director of the German Chamber of Industry and Commerce (DIHK). The association has been collecting examples of intra-European bureaucracy for some time for its "I Can't Work Like This" campaign. "This leads to customers in some countries not being able to be supplied." The EU has attempted to create uniform rules with the Packaging Ordinance. However, according to Melnikov, this has "unfortunately only been partially successful."
For example, the law requires that an authorized export representative be appointed for each country, something small companies can hardly afford. The EU has repeatedly failed in similar attempts to harmonize individual products, often because countries are unwilling to abandon their own rules or simply pile on top of EU requirements. They accept the fact that this creates new hurdles for trade.
However, Letta criticizes in his report that protecting their own companies from foreign competition is often at least a welcome side effect.
This applies even more to services than to the trade in goods, as Schmiedeberg's experience shows. The required registrations are complex and vary so much from country to country that many companies have to engage external service providers to avoid the risk of a fine. Companies must prove that they comply with the locally applicable maximum working hours, minimum rest periods, and minimum wage rates for their posted employees. Some companies complain that it is easier to post employees to a non-EU country than to a country within the EU. Mobility is also limited by the number of professions that are regulated differently by EU member states. This affects 5,400 of them, or 22 percent of the workforce.
The A1 certificate is also a perennial favorite. Employees must carry it with them when they work in another EU country, even if only for a short time. The certificate serves as proof that they are covered by social insurance [1] in their home country. The employer must apply for it from the responsible social insurance provider. Here, too, each country has its own forms and procedures, and the application process takes an average of around 20 minutes. If it were up to the business community, business trips would be exempt from the certification requirement.
The once highly controversial Services Directive, with which the Commission sought to advance the internal market, has failed. Economists agree on this. "In the end, it allowed too many exceptions and therefore failed to reduce the fragmentation of the services sector in many areas," says Poitiers.
According to the Commission, 60 percent of the barriers in the services sector that were identified more than 20 years ago still exist today.
The potential that the EU is wasting here is enormous, according to a position paper by the trade association Business Europe. When the Services Directive was published in the Official Journal in 2006 after a long struggle, intra-European trade in services accounted for 5 percent of the EU's economic output, according to Business Europe. By 2022, it had barely increased to 8 percent.
Pelkmans estimates the potential of opening up the services sector alone at almost €400 billion – or 2.2 percent of economic output. Overall, he argues, the completion of the EU internal market, including the digital and energy markets, could increase prosperity in the medium term by more than €1.2 trillion, or 9 percent of economic output. Letta calculates in his report that removing just 20 percent of the barriers to cross-border trade in the EU would increase economic output by two percent and create more than one million jobs.
All stakeholders agree that it is time to act. The Commission is primarily pushing ahead with the completion of the capital market and is focusing on the internal energy market. Every new Commission since 2006 has shied away from a new attempt at services. "For this to happen, the member states must first send a signal that they are ready for genuine opening," says Poitiers, "so as not to get stuck in the minutiae again."” [2]
1. Social insurance is a system of social welfare that provides protection against economic risks through publicly-funded insurance programs. It's a type of social security that offers financial support to individuals and families facing various life challenges, such as retirement, disability, unemployment, or death of a family member. In the US, Social Security, Medicare, unemployment insurance, and workers' compensation are examples of social insurance programs.
Lithuania is particularly quick to engage in cheap dumping, which destroys the businesses of other EU countries. We constantly boast: "Look, there is a crisis, and we are the only ones in the entire EU growing the economy." We are not growing the economy, we are handing over the EU to the Chinese for destruction. We should be thrown out of the European Union for such greed. It is unlikely that things will go that far, but a blow struck by non-tariff measures is fatal to our businesses. D. Trump shows everyone the only way out.
2. Härter als Trump: Wie die EU sich selbst blockiert. Frankfurter Allgemeine Zeitung; Frankfurt. 29 Mar 2025: 20. Von Hendrik Kafsack, Julia Löhr und Johannes Pennekamp
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