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United States President Donald Trump’s sweeping new tariffs on American imports shocked governments and investors around the world, swiftly spurring both threats of retaliation and calls for negotiation as industries scrambled and global stocks tumbled.
China accused the US of “bullying” and the European Union promised “robust” countermeasures, with French officials suggesting taxes to hit US tech giants.
Yet the United Kingdom and Japan, among others, expressed hope for a deal with Trump and refrained from talk of retaliation against the world’s biggest economy, fearing that slapping their own tariffs on American goods would only make things worse.
Trump said Wednesday that the import taxes, ranging from 10 per cent to 49 per cent, would reverse unfair treatment by American trading partners and draw factories and jobs back home.
“Taxpayers have been ripped off for more than 50 years,” he said. “But it is not going to happen anymore.” Trump imposed a 34 per cent levy on goods from China on top of an earlier 20 per cent tariff, as well as a 20 per cent tariff on the EU, 24 per cent on Japan and 25 per cent on South Korea.
China already announced retaliatory measures
China, a key exporter to the US of everything from clothing to kitchenware, has already announced a raft of retaliatory measures expected to raise prices for US consumers.
“There are no winners in trade wars and tariff wars,” China’s Foreign Ministry spokesperson Guo Jiakun said. “It’s clear to everyone that more and more countries are opposing the unilateral bullying actions of the US” French President Emmanuel Macron met with representatives from key commercial sectors affected by the tariffs, like wines and spirits, cosmetics and aircraft, after urging businesses to suspend all investments in the US “What would be the message of having major European players investing billions of euros in the American economy at a time when they’re hitting us?” Macron asked.
European Commission President Ursula von der Leyen denounced Trump’s levies as a “major blow to the world economy” but held off announcing new countermeasures. She said the commission — which handles trade issues for the 27 EU member countries — was “always ready” to talk.
Analysts say there’s little to be gained from an all-out trade war, since higher tariffs can restrain growth and raise inflation.
“Europe will have to respond, but the paradox is that the EU would be better off doing nothing,” said Matteo Villa, a senior analyst at Italy’s Institute for International Political Studies.
“Trump seems to understand only the language of force, and this indicates the need for a strong and immediate response,” Villa said. “The hope, in Brussels, is that the response will be strong enough to induce Trump to negotiate and, soon, to backtrack.” Italian Prime Minister Giorgia Meloni told Italian state TV on Thursday that she hoped for exactly that.
“We need to open an honest discussion on the matter with the Americans, with the goal — at least from my point of view— of removing tariffs, not multiplying them,” Meloni said.
Next target could be US tech companies
Europe’s strategy so far has been to limit retaliation to a few politically sensitive goods, like whiskey and Harley-Davidson motorcycles, in an attempt to push the US to the negotiating table.
Economists say that Europe could broaden the trade war to the vast services sector by targeting Big Tech — a category more vulnerable to retaliation because the US exports more than it imports.
The EU response could include a tax on US digital giants such as Google, Apple, Meta, Amazon and Microsoft, as French officials have recommended.
Outgoing German Chancellor Olaf Scholz said the EU “must show that we have strong muscles.” But he expressed no appetite for sparking an all-out trade war that could hobble the bloc’s export-dependent economy.
“An agreement,” he said, “is best for prosperity in the US, for prosperity in Europe and for prosperity in the world.” British Prime Minister Kier Starmer said his government would react with “cool and calm heads,” telling business leaders in London that he hoped to strike a trade deal with the US that would see the tariffs rescinded.
“Nobody wins in a trade war, that is not in our national interest,” Starmer said.
Japan, the biggest foreign investor in the US and its closest ally in Asia, plans to assess the impact of the tariffs, Chief Cabinet Secretary Yoshimasa Hayashi said, displaying a more conciliatory approach.
Blow to the world economy
The round of tariffs jolted financial markets, with the US Standard & Poors 500 off 3.7 per cent in afternoon trading.
The STOXX Europe 600 index fell 2.7 per cent and a 2.8 per cent drop in Tokyo’s benchmark led losses in Asia. Oil prices sank more than USD 2 a barrel. Analysts fished for superlatives to convey the disruption to the global trading order as Trump’s announcement overturned decades of efforts to lower tariffs through free trade agreements and negotiations.
“The magnitude of the rollout — both in scale and speed — wasn’t just aggressive; it was a full-throttle macro disruption,” Stephen Innes of SPI Asset Management said.
With an average tariff of 25 per cent-30 per cent, the highest since the early 20th century, the US has initiated a “radical policy reordering,”said Deutsche Bank’s Jim Reid.
The head of the World Trade Organization warned that US protectionist measures will likely cause global trade volumes to drop by about 1 per cent this year.
“I’m deeply concerned about this decline and the potential for escalation into a tariff war with a cycle of retaliatory measures that lead to further declines in trade,” said WTO Director-General Ngozi Iweala-Okonjo.
Higher prices loom
The tariffs are not paid by the foreign countries they target, but by the US-based companies that buy the goods to sell to Americans.
Now companies must decide whether to absorb the new taxes or pass them on to consumers in the form of higher prices.
The makers of Italy’s Parmigiano Reggiano cheese, for instance, say the new tariffs mean US consumers will pay more for their crumbly pasta topping.
“Americans continued to choose us even when the price went up” after an earlier round of Trump tariffs in 2019, said Nicola Bertinelli, president of the Parmigian Reggiano Consortium. “Putting tariffs on a product like ours, only increases the price for American consumers, without protecting local producers.” The Consumer Brands Association, which represents big food companies like Coca-Cola and General Mills as well as consumer product makers like Procter & Gamble, warned that although its businesses make most of their goods in the US, they now face tariffs on critical ingredients — like wood pulp for toilet paper or cinnamon — that must be imported because of domestic scarcity.
“We encourage President Trump and his trade advisors to fine-tune their approach and exempt key ingredients and inputs in order to protect manufacturing jobs and prevent unnecessary inflation at the grocery store,” said Tom Madrecki, the association’s vice-president of supply chain resiliency.
On a Pacific island, incomprehension
A eye-popping 29 per cent tariff imposed on Norfolk Island came as a shock to the remote South Pacific outpost’s 2,000 inhabitants, particularly as its governing nation, Australia, was hit with a far lower tariff of 10 per cent.
“To my knowledge, we do not export anything to the United States,” Norfolk Island Administrator George Plant, the Australian government’s representative on the island, said Thursday. “We’re scratching our heads here.” Vladimir Putin’s Russia, meanwhile, was left off Trump’s list.
Published on April 4, 2025
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