Europe Prepares to Fight Back Against Trump Tariffs

BRUSSELS, MONDAY - European leaders are preparing to face US tariffs after US President Donald Trump imposed high import duties on Mexico, Canada, and China. European Union leaders have stated that they are ready to retaliate.

European Union leaders met at an informal summit in Brussels, Belgium, on Monday (3/2/2025). After the meeting, they stated that Europe would be ready to retaliate if the US imposes tariffs. However, they requested reasons and opened the door for negotiations.

French President Emmanuel Macron stated that if the European Union is attacked because of its commercial interests, it must make itself respected, and therefore needs to react.

He added that the US declaration actually encouraged Europe to become stronger and more united.

Chancellor Olaf Scholz of Germany stated that the European Union could respond to the US by imposing tariffs on the US. However, he emphasized that it would be better for the US and the European Union to reach an agreement on trade.

Germany is the European Union's largest economy and is heavily dependent on exports.

According to Luxembourg Prime Minister Luc Frieden, a tariff war will have a negative impact on US trade. "In my opinion, tariffs are always bad. Tariffs are bad for trade. Tariffs are bad for the United States," he said.

I think tariffs are always bad. Tariffs are bad for trade. Tariffs are bad for the United States.

Trump has hinted that Britain may be spared tariffs. Britain leaves the EU in 2020.

The US is the largest trade and investment partner of the EU. However, the trade balance has been uneven. The value of US imports has always been higher than exports to the European Union. As a result, the US has experienced a trade deficit with the EU.

According to Eurostat data, the US trade deficit in goods with the EU reached 161.6 billion US dollars in 2023. However, in the services sector, the US experienced a trade surplus in exports over imports with the EU amounting to 106.8 billion US dollars.

The head of EU foreign policy, Kaja Kallas, stated that there are no winners in a trade war. "If a trade war occurs between Europe and the US, then China will be the one laughing," she said.

Previously, in Washington, Trump stated that tariffs on the three largest US trading partners, namely Mexico, Canada, and China, would take effect on Tuesday (4/2/2025).

He acknowledged that tariffs may hurt Americans in the short term. But in the long term, they will be good. “The U.S. has been ripped off by almost every country in the world,” he said.

Speaking at his Mar-a-Lago residence in Florida, US, on Sunday (2/2/2025), Trump indicated that the 27-member European Union would be the next target of tariffs. However, he did not say when or how much.

"They don't buy our cars, they don't buy our agricultural products. They take almost nothing and we take everything from them," he said.

Tariffs on Canada, Mexico and China will take effect Tuesday U.S. time or early Wednesday Indonesian time. Trump said he would hold talks with Canadian and Mexican leaders.

Trump has announced 25 percent tariffs on Mexico and Canada, while China will be hit with 10 percent tariffs on top of existing tariffs. Both of the US's closest neighbors have announced retaliatory tariffs.

But Trump hinted there would be no further changes. "They owe us a lot of money, and I'm sure they'll pay it," Trump said.

Economists say Trump's tariffs will slow global growth and push prices higher for Americans.

Trump said the tariffs were needed to stop illegal immigration and the fentanyl drug trade. The tariffs were also intended to spur domestic industry.

Financial markets reacted on Monday to concerns about the impact of the trade war. Stock markets around the world were sluggish. Global currencies fell.

That’s because of concerns that tariffs could trigger an economically damaging trade war. The pan-European STOXX 600 index fell 1.3 percent in Monday morning trade. Wall Street’s S&P 500 fell 1.4 percent.

Tokyo stocks ended down nearly 3 percent and the Australian benchmark fell 1.8 percent. Markets in mainland China remained closed for the Lunar New Year holiday.

China's yuan, the Canadian dollar and the Mexican peso fell against the strong U.S. dollar. U.S. oil prices jumped more than 1 percent while gasoline futures rose nearly 3 percent.

Trump’s tariffs would cover nearly half of all U.S. imports. They would also require the U.S. to more than double its own manufacturing output to cover the gap.

The tariff war is also considered to be able to throw Canada and Mexico into recession and trigger stagflation, which is high inflation but stagnant economic growth. This condition will be followed by high unemployment in the country.

In Europe, economists at Deutsche Bank said they are currently pricing in a 0.5 percent hit to gross domestic product (GDP) if Trump imposes 10 percent tariffs on the EU.

The White House fact sheet does not provide details on what conditions Canada, Mexico and China would have to meet to lift the tariffs.

Trump called deadly fentanyl and illegal immigration a martial law. He said he would maintain tariffs until the national emergency over fentanyl and illegal immigration into the U.S. is over.

China has called fentanyl a US problem. Beijing has said it will challenge the US tariffs at the World Trade Organization (WTO). Beijing has also said it will take retaliatory measures. However, Beijing has also kept the door open for negotiations.

Mexican President Claudia Sheinbaum has vowed to retaliate. She will provide more details on Monday about retaliatory tariffs on the U.S.

Similarly, Canada said it would take legal action under relevant international bodies to challenge the tariffs.

Automakers will be hit particularly hard by new tariffs on vehicles made in Canada and Mexico. Shares in Volkswagen, BMW, Porsche, Stellantis and truck maker Daimler Truck all fell about 5-6 percent in European trading on Monday.

Analysts at investment bank Stifel estimate that VW's revenue will take an 8 billion euro hit from the tariffs. Stellantis is estimated to take a 16 billion euro hit. (AP/AFP/Reuters)