The assembly line at a Volkswagen plant in Emden, Germany, on Feb. 18. Wednesday's tariffs come in addition to a 25-per-cent tax on foreign-made vehicles and steel, which will impact Britain and several EU member states such as Germany.Carmen Jaspersen/Reuters
Leaders from across Europe have condemned the tariffs imposed by U.S. President Donald Trump, and the European Union has vowed to take retaliatory action.
European stock markets also fell sharply on Thursday as investors weighed the impact of the measures. London’s FTSE 100 index closed down 1.5 per cent, while the benchmark Stoxx Europe 600 index was down 2.7 per cent.
Mr. Trump has announced a 20-per-cent tariff on all imports from the EU and a 10-per-cent charge on products from Britain. Those are in addition to a 25-per-cent levy on foreign-made vehicles and steel, both of which will affect Britain and EU member states such as Germany.
On Wednesday, Mr. Trump took aim at the EU and called the bloc one of America’s worst trading partners. “They’re very tough. Very, very tough traders. You know, you think of the European Union, very friendly. They rip us off. It’s so sad to see. It’s so pathetic,” he said in announcing the tariffs.
He argued that higher tariffs on all countries will rebalance U.S. trade and increase domestic manufacturing. But the measures also risk igniting a global trade war, as leaders react to his announcement and prepare countertariffs.
“I deeply regret this choice. Let’s be clear-eyed about the immense consequences,” said European Commission President Ursula von der Leyen. “The global economy will massively suffer.”
Ms. von der Leyen said that while she agreed with Mr. Trump that there are deficiencies in world trade, “reaching for tariffs as your first and last tool will not fix it.”
She added that the EU was willing to negotiate with Mr. Trump but that the commission was also finalizing a package of countermeasures. “We are in this together,” she said of the 27-member EU. “If you take on one of us, you take on all of us.”
The EU’s initial round of countertariffs is set to take effect in mid-April and will be applied to roughly €26-billion ($40.4-billion) worth of U.S. products, including bourbon whisky, clothing and Harley-Davidson motorcycles. Further tariffs are expected to be levied on agricultural products, household appliances and building materials.
The EU is also considering targeting the service sector, where it has far more leverage.
While the bloc ran a €157-billion surplus on its trade in goods with the U.S. in 2023, it recorded a €109-billion deficit when it came to services. According to economists at Dutch bank ING, the EU could impose a range of non-tariff barriers on U.S. services such as tightening regulations on technology companies, delaying approval of business licences for U.S. companies, limiting access to public contracts or banning investment in the EU.
German Finance Minister Jörg Kukies said he expected a strong response from the EU. “It would be naive to think that if we just sit there and let this happen,” he told the BBC Thursday.
Italian Prime Minister Giorgia Meloni called the U.S. tariffs wrong and said her government would “do everything we can to work towards an agreement with the United States, with the aim of avoiding a trade war that would inevitably weaken the West in favour of other global players.”
The British government has taken a more muted approach and has yet to announce any retaliatory measures. Prime Minister Keir Starmer had been hoping his quiet diplomacy would spare Britain from the worst of Mr. Trump’s tariffs. British officials have also insisted that trade between the U.K. and the U.S. is largely in balance and that tariffs were not necessary.
Although the government was disappointed by Mr. Trump’s decision to impose a 10-per-cent levy on British goods, there was some relief in Downing Street as the tariff could have been much higher.
Mr. Starmer said Thursday that the government would continue to work with the U.S. on a trade deal.
“Negotiations on an economic prosperity deal – one that strengthens our existing trading relationship – they continue, and we will fight for the best deal for Britain,” he said before meeting a group of business leaders. “We have a range of levers at our disposal and we will continue our work with businesses across the country to understand their assessment of these options. As I say, our intention remains to secure a deal.”
He added that “nobody wins a trade war” and that the U.K. was prepared to respond if necessary. “Clearly, there will be an economic impact from the decisions the U.S. has taken both here and globally. But I want to be crystal clear: We are prepared. Indeed, one of the great strengths of this nation is our ability to keep a cool head.”
U.S. President Donald Trump's move to slap a 10 per cent tariff on most goods imported to the United States, as well as much higher levies on dozens of rivals and allies alike, has intensified a global trade war that threatens to stoke inflation and stall growth.
Reuters