Trump warns of additional tariffs as the EU and Canada respond with retaliatory measures

Shortly after the U.S. imposed a 25% tariff on all steel and aluminum imports, President Donald Trump warned of additional penalties if the European Union proceeded with its plan to impose counter-tariffs on certain U.S. goods next month. "Whatever they charge us, we're charging them," Trump stated at the White House.

Trump’s aggressive stance on tariffs has unsettled investors, businesses, and consumers, raising fears of a recession. His approach has also strained relations with Canada, a key ally and trade partner, as he repeatedly threatened the country's sovereignty.

Canada, the largest foreign supplier of steel and aluminum to the U.S., announced retaliatory tariffs of 25% on those metals, along with levies on computers, sports equipment, and other products totaling $20 billion. The country had previously imposed similar duties on U.S. goods in response to broader tariffs by Trump. "We will not stand idly by while our iconic steel and aluminum industries are unfairly targeted," said Canada’s Finance Minister Dominic LeBlanc. In anticipation of economic disruption, Canada’s central bank also lowered interest rates.

Trump’s move restores a 25% tariff on all steel and aluminum imports while extending duties to hundreds of downstream products, including nuts, bolts, bulldozer blades, and soda cans. U.S. Commerce Secretary Howard Lutnick confirmed that Trump also plans to implement trade protections on copper.

A Reuters/Ipsos poll indicated that 57% of Americans view Trump’s economic policies as erratic, while 70% expect the tariffs to increase consumer prices.

EU Faces Limited Impact

The European Union is less vulnerable to the new tariffs, as only a "small fraction" of the targeted products are exported to the U.S., according to Germany’s Kiel Institute. However, the EU plans to counter with tariffs on up to $28 billion worth of U.S. goods, including dental floss, diamonds, bathrobes, and bourbon. The liquor industry has warned of severe consequences for the sector.

European Commission President Ursula von der Leyen emphasized the need for dialogue, stating, "It is not in our common interest to burden our economies with such tariffs."

At the White House, Trump reiterated that he would impose additional tariffs if the EU followed through with its retaliatory measures. Standing alongside Irish Prime Minister Micheál Martin, Trump criticized Ireland, an EU member, for attracting U.S. pharmaceutical companies.

Martin, however, highlighted the long-standing trade relationship between the U.S. and Ireland. "Let us continue to build on that foundation," he said, as Trump remained expressionless.

Meanwhile, China’s foreign ministry vowed to protect its economic interests, while Japan’s Chief Cabinet Secretary Yoshimasa Hayashi warned of potential negative impacts on U.S.-Japan trade ties.

Close allies such as the UK and Australia criticized the blanket tariffs but opted not to impose immediate retaliatory measures. Brazil, the second-largest steel supplier to the U.S., also refrained from immediate retaliation.

Market Reaction and Business Concerns

Despite the anticipated tariff hike, global stock markets remained stable. However, businesses remain apprehensive. Luxury car and chemical manufacturers have expressed concerns about weakening consumer and industrial demand. Data from LSEG reveals that over 900 of the largest 1,500 U.S. companies have referenced tariffs in earnings reports or investor discussions this year.

"We are in a trade war, and once it starts, it tends to escalate," said Airbus CEO Guillaume Faury in an interview with French media.

Shares of German sportswear brand Puma plummeted nearly 25% following disappointing earnings, reflecting fears that trade tensions are dampening U.S. consumer spending.

U.S. steel producers welcomed the new measures, noting that Trump’s 2018 tariffs had been weakened by exemptions. Domestic steel and aluminum prices remained near recent highs.

JPMorgan’s chief economist estimated a 40% chance of a U.S. recession this year, cautioning that prolonged trade disputes could damage the country’s reputation as a stable investment hub. A sharp stock market selloff in March erased all gains made on Wall Street since Trump’s election.

Strained U.S.-Canada Relations

The escalation of the U.S.-Canada trade dispute coincides with Canadian Prime Minister Justin Trudeau preparing to transition power to his successor, Mark Carney.

"I'm ready to meet with President Trump at the right time, under conditions that respect Canadian sovereignty and foster a collaborative approach," Carney stated while visiting a steel plant in Ontario.

Other Canadian officials are set to meet U.S. counterparts in Washington on Thursday.

In Canada, tensions have spilled into daily life. The U.S. national anthem has been booed at hockey games, some retailers have removed American products from shelves, and travel to the U.S. has declined by 20% compared to the previous year.