Donald Trump intensified the global trade conflict on Wednesday by threatening to escalate tariffs on European Union goods, following the EU’s announcement of retaliatory measures. This latest move comes as the US officially enforced 25% tariffs on steel and aluminum imports, a decision that has already sparked strong responses from major trading partners. Trump doubled down, stating, "Whatever they charge us, we're charging them," signaling an aggressive stance if the EU proceeds with counter-tariffs next month.
Canada, the largest foreign supplier of steel and aluminum to the US, wasted no time in announcing its own countermeasures — imposing 25% tariffs on those same metals, as well as a wide array of US goods including computers, sports equipment, and other products amounting to USD 20 billion. Canadian Finance Minister Dominic LeBlanc made the country’s position clear: "We will not stand idly by while our iconic steel and aluminum industries are being unfairly targeted." To brace for the economic fallout, Canada’s central bank swiftly cut interest rates, aiming to mitigate potential disruption.
Trump’s decision to bolster protections for American steel and aluminum producers goes beyond raw materials, extending tariffs to downstream products like nuts, bolts, bulldozer blades, and soda cans — everyday items woven into the fabric of US manufacturing. US Commerce Secretary Howard Lutnick hinted that copper might be next in line for trade protections, broadening the scope of the administration’s industrial strategy. Public opinion appears uneasy, with a Reuters/Ipsos poll showing that 57% of Americans view Trump’s approach as too unpredictable, while a striking 70% fear the tariffs will push up prices on essential goods, squeezing household budgets.
The European Union, though a significant US trading partner, appears less vulnerable to these tariffs. According to Germany's Kiel Institute, only a "small fraction" of the EU’s exports are directly targeted. Nonetheless, the bloc is preparing counter-tariffs valued at USD 28 billion, targeting symbolic American goods like dental floss, diamonds, bathrobes, and bourbon — luxury and consumer items intended to make a statement rather than inflict economic damage. Despite the relatively narrow scope, sectors like the European liquor industry have warned the penalties could have "devastating" consequences for their market.
European Commission President Ursula von der Leyen sought to de-escalate the situation, emphasizing that more tariffs would only harm both sides, urging Washington to return to the negotiating table. "It is not in our common interest to burden our economies with such tariffs," she stated.
Trump, however, remained steadfast, warning that he would "of course" retaliate with even more tariffs if the EU proceeded. During a White House appearance alongside Irish Prime Minister Micheal Martin, Trump took the opportunity to criticize Ireland, an EU member, for attracting US pharmaceutical companies with favorable tax policies. Martin responded diplomatically, stressing the long history of economic collaboration between the two nations: "Let us continue to build on that foundation… to maintain that mutually beneficial, two-way economic relationship that has allowed innovation, creativity, and prosperity to thrive." Trump listened in silence, his expression unreadable.
Global reactions varied. China’s foreign ministry vowed to protect its economic interests, while Japan’s Chief Cabinet Secretary Yoshimasa Hayashi warned that the tariffs could severely impact US-Japan economic relations. Traditional US allies like Britain and Australia voiced disapproval but stopped short of announcing immediate countermeasures. Brazil, the second-largest steel supplier to the US, opted for caution, choosing not to retaliate immediately.
Financial markets, having anticipated the tariff escalation, remained relatively stable. Still, behind the scenes, companies voiced growing anxiety. Luxury car manufacturers and chemical producers in particular painted a grim picture of weakening consumer and industrial demand. Airbus CEO Guillaume Faury remarked on French television, "We are in a trade war, and when a trade war begins, it tends to sustain itself and feed itself." German sportswear giant Puma’s shares plummeted by nearly 25% after reporting sluggish US sales, reinforcing fears that trade disputes are already hitting consumer spending.
US steel producers, on the other hand, applauded Trump’s actions. Industry leaders argued that his 2018 tariffs were diluted by exemptions, and welcomed this latest move to restore stricter protections. Prices of domestic steel and aluminum hovered near recent peaks, benefiting producers but increasing costs for downstream industries that rely on these materials — from car manufacturers to beverage companies.
Economists are increasingly uneasy. JPMorgan projected a 40% chance of a US recession in the coming year, warning that Trump’s unpredictable approach to trade policy could inflict long-term damage on America’s reputation as a stable, reliable investment destination. Wall Street’s sharp sell-off in March erased all gains made since Trump’s election, a sobering indicator of investor uncertainty.
The US-Canada trade conflict, once a simmering dispute, has now erupted into a full-blown diplomatic standoff. The timing is politically sensitive for Canada, as Prime Minister Justin Trudeau prepares to hand over leadership to his successor, former Bank of England Governor Mark Carney. Carney signaled his willingness to engage with Washington but made it clear that Canada would not yield easily. "I'm ready to sit down with President Trump at the appropriate time, under a position where there's respect for Canadian sovereignty, and we're working for a common approach," he stated while visiting a steel plant in Ontario.
Anti-American sentiment is gaining momentum across Canada. US national anthems have been booed at hockey games, stores have started removing US products from shelves, and Canadian travelers are increasingly avoiding trips to the US, with bookings reportedly down by 20% compared to the previous year. Canadian officials are set to meet with their US counterparts in Washington on Thursday, though hopes for a quick resolution are dimming.
As both sides dig in, the trade war seems poised to escalate further, entangling more industries and countries. With global markets bracing for turbulence and political leaders on edge, the coming weeks could determine whether this trade conflict simmers down or spirals into an economic showdown with lasting consequences.
