Trump warns of additional tariffs as the EU and Canada respond to existing ones

On Wednesday, Donald Trump threatened to intensify a global trade conflict by introducing additional tariffs on goods from the European Union, as key U.S. trading partners indicated they would respond to the trade barriers already established by the president.

Shortly after the implementation of Trump’s 25% tariffs on all steel and aluminum imports into the U.S., he warned that further penalties would be enacted if the EU proceeded with its plans to impose counter-tariffs on certain American products next month. “Whatever they charge us, we’re charging them,” Trump stated to reporters at the White House.

Trump’s intense focus on tariffs has unsettled investor, consumer, and business confidence, raising concerns about a potential recession. His approach has also strained relations with Canada, a close ally and significant trading partner, due to his repeated threats regarding the annexation of the country.

Canada, the largest foreign supplier of steel and aluminum to the U.S., announced retaliatory tariffs of 25% on these metals, as well as on computers, sports equipment, and other products totaling $20 billion. In response to Trump’s broader tariffs, Canada has already imposed similar tariffs on U.S. goods.

“We will not stand idly by while our iconic steel and aluminum industries are being unfairly targeted,” stated Canada’s Finance Minister Dominic LeBlanc. Additionally, Canada’s central bank has lowered interest rates in anticipation of economic disruption.

Trump’s measures to enhance protections for American steel and aluminum producers reestablish effective tariffs of 25% on all imports and extend these duties to a wide range of downstream products, including nuts, bolts, bulldozer blades, and soda cans. U.S. Commerce Secretary Howard Lutnick also indicated that Trump would implement trade protections on copper.

A Reuters/Ipsos survey revealed that 57% of Americans believe Trump is acting too unpredictably in his attempts to revitalize the U.S. economy, while 70% anticipate that tariffs will lead to higher prices for consumers.

EU’S LOWER VULNERABILITY

According to Germany’s Kiel Institute, the 27 member states of the European Union are less vulnerable, as only a “small fraction” of the products targeted by tariffs are exported to the United States.

The EU’s retaliatory measures could affect up to $28 billion worth of American goods, including items such as dental floss, diamonds, bathrobes, and bourbon, which represent a minor segment of the extensive EU-U.S. trade relationship. Nevertheless, the liquor industry has warned that these tariffs would be “devastating” for their sector. Commission President Ursula von der Leyen stated that the EU would reinitiate discussions with U.S. officials, emphasizing that imposing such tariffs is not in the best interest of either economy.

In response, Trump indicated that he would “of course” impose additional tariffs if the EU proceeded with its plans. Standing alongside Irish Prime Minister Micheal Martin, Trump criticized the EU member state for attracting U.S. pharmaceutical companies. Later, during a White House event, Martin highlighted the longstanding history of free trade between the two nations, urging, “Let us continue to build on that foundation,” while Trump remained expressionless. He added, “Let us continue to collaborate to ensure that we uphold the mutually beneficial, two-way economic relationship that has fostered innovation, creativity, and prosperity.”

China’s foreign ministry asserted that it would protect its interests, while Japan’s Chief Cabinet Secretary Yoshimasa Hayashi noted that the tariffs could significantly affect U.S.-Japan economic relations.

Close U.S. allies, Britain and Australia, expressed their disapproval of the broad tariffs but have ruled out any immediate reciprocal measures. Brazil, the second-largest supplier of steel to the United States, also stated it would refrain from immediate retaliation.

STOCKS REMAIN STABLE, COMPANIES ON EDGE

Despite the anticipated tariff increase on Wednesday, global stock markets showed little movement. However, the ongoing trade tensions have left companies feeling anxious, particularly those in the luxury car and chemical sectors, who have painted a bleak outlook for both consumer and industrial health. According to LSEG data, over 900 of the 1,500 largest U.S. companies have referenced tariffs during earnings calls or investor meetings this year. “We are in a trade war, and once it starts, it tends to perpetuate itself,” remarked Airbus CEO Guillaume Faury in an interview on French television.

Shares of German sportswear brand Puma plummeted by nearly 25% after their earnings report highlighted concerns that trade issues are impacting American consumer spending. U.S. steel manufacturers welcomed the tariff increase, pointing out that Trump’s 2018 tariffs had been diluted by numerous exemptions. The prices of aluminum and steel in the U.S. remain close to recent highs.

JPMorgan’s chief economist predicted a 40% likelihood of a U.S. recession this year, warning of potential long-term damage to the country’s reputation as a reliable investment destination if trust in U.S. governance is compromised by Trump. A significant selloff in U.S. stocks in March has erased all gains made by Wall Street since Trump’s election.

TENSE RELATIONS WITH CANADA

The U.S.-Canada trade conflict intensified as Prime Minister Justin Trudeau prepares to transition leadership to his successor, Mark Carney. “I am open to meeting with President Trump at the right moment, provided there is mutual respect for Canadian sovereignty and a collaborative approach,”

Carney stated during his visit to a steel manufacturing facility in Ontario. Additionally, other Canadian officials are scheduled to engage with U.S. representatives in Washington on Thursday.

The U.S. national anthem has faced boos at hockey matches, and several retailers have opted to remove American products from their inventory. Furthermore, there has been a 20% decline in travel bookings to the United States compared to the previous year, as travelers are increasingly avoiding the country.