MEXICO CITY – U.S. President Donald Trump's s weeping new tariffs shocked governments and investors, provoking dismay, threats of retaliation and calls for negotiations to rescind the stiff new import taxes imposed on goods from countries around the world. Global stocks sagged.
China accused the U.S. of “bullying” and the European said it was ready to retaliate, with French officials suggesting measures to hit U.S. big tech companies.
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Yet the calls for making a deal from the EU, the U.K. and Japan indicated a lack of appetite for escalating trade tensions with the world's biggest economy and fear that slapping tariffs on U.S. goods will only make things worse.
Trump said Wednesday that the import taxes, ranging from 10% to 49%, would do to U.S. trading partners what they have long done to the U.S. He maintains they will draw factories and jobs back to the United States.
“Taxpayers have been ripped off for more than 50 years,” he said. “But it is not going to happen anymore.”
Trump imposed a 34% levy on goods from China on top of an earlier 20% tariff, as well as a 20% tariff on the European Union, 24% on Japan and 25% on South Korea.
China's Foreign Ministry spokesperson Guo Jiakun called for trade talks and said that “there are no winners in trade wars and tariff wars, and protectionism is not a way out ... It is clear to everyone that more and more countries are opposing the U.S.’s unilateral bullying actions, such as imposing tariffs.”
China, which is a key exporter to the U.S. of everything from kitchenware to clothing, has already announced a raft of retaliatory measures set to raise prices for U.S. consumers.
French President Emmanuel Macron urged businesses to “suspend” investments in the U.S. pending talks with the Trump administration, denouncing a “brutal and unfounded” decision.
"Because 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 said before meeting with representatives of key businesses affected by U.S. tariffs, including wines and spirits, food industry, cosmetics, health, metals and aircraft.
European Commission President Ursula von der Leyen denounced the tariffs as a “major blow to the world economy” but held off announcing new retaliatory measures and said the commission - which handles trade issues for the 27 member countries - was “always ready” to talk.
Analysts say there’s little to be gained from an all-out trade war, for the United States or other countries, since higher tariffs can lower growth and raise inflation. The tariffs are not paid by the countries they're imposed on, but by the companies in the U.S. that buy the goods to sell to Americans. They must decide whether to absorb the new taxes or pass them on to consumers in the form of higher prices.
“If Trump really imposes high tariffs, 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.
“On the other hand, Trump seems to understand only the language of force, and this indicates the need for a strong and immediate response,” Villa said. “Probably the hope, in Brussels, is that the response will be strong enough to induce Trump to negotiate and, soon, to backtrack.”
The makers of Italy’s Parmigiano Reggiano cheese say the new tariffs just mean U.S. consumers will pay more, since the protected designation cheese doesn’t really compete with U.S. made parmesan. “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,’’ he said.
Next target could be U.S. tech companies
Europe's strategy so far has been to limit retaliation to early tariff rounds to just a few politically sensitive goods such as bourbon and motorcycles in an attempt to push the U.S. to the negotiating table, rather than escalate an all-out trade war that could cripple its export-dependent economy.
Economists say the next target could be U.S. tech companies. They fall into the services category, where the U.S. exports more than it imports to Europe and thus would be more exposed to retaliation.
The EU response, likely to be ready by the end of April, could include a tax on U.S. digital giants such as Google, Apple, Meta, Amazon and Microsoft, as French officials have been advocating.
Outgoing German Chancellor Olaf Scholz said the EU "must show that we have strong muscles.”
He added: “But this is with the aim of an agreement, because that is the best for prosperity in the U.S., for prosperity in Europe and for prosperity in the world.”
British Prime Minister Kier Starmer said the U.K. government would react with “cool and calm heads," telling business leaders in London that he hopes to get the tariffs lifted with a trade deal. “Nobody wins in a trade war, that is not in our national interest,” Starmer said.
Japan, America's closest ally in Asia, plans to closely analyze the U.S. tariffs and their impact, Chief Cabinet Secretary Yoshimasa Hayashi said, while refraining from talk of retaliation.
‘Blow to the world economy’
Financial markets were jolted, with the U.S. Standard & Poors 500 off 3.7% in afternoon trading. The STOXX Europe 600 index fell 2.7% and a 2.8% drop in Tokyo’s benchmark led losses in Asia. Oil prices sank more than $2 a barrel. Analysts fished for superlatives to a step that disrupts the global trading order and overturns decades of efforts to lower tariffs through trade talks and free trade agreements.
“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 in a commentary. Deutsche Bank's Jim Reid called it “radical policy reordering” and said the U.S. now had an average tariff of 25%-30%, the “worst end of expectations” and the highest since the early 20th Century.
“This is a game changer, not only for the U.S. economy but for the global economy. Many countries will likely end up in a recession,” Olu Sonola, Fitch Ratings’ head of U.S. Economic Research, said in a report. “You can throw most forecasts out the door, if this tariff rate stays on for an extended period of time.”
On a Pacific island, incomprehension
A 29% tariff imposed on the tiny South Pacific outpost of Norfolk Island came as a shock. The Australian territory has a population of around 2,000 people and the economy revolves around tourism.
“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, told the AP on Thursday. “We don’t charge tariffs on anything ... so we’re scratching our heads here.”
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AP journalists around the world contributed to this story.