US president Donald Trump has announced a planned tariff of 25% to be levied on EU imports, claiming that the bloc was formed “to screw the United States”.
Speaking at his first cabinet meeting yesterday (26 February) since returning to the White House, he told reporters that he would announce tariffs “very soon” and hinted cars were a particular target:
“It’ll be 25% generally speaking, and that will be on cars and all other things."
A spokesperson for the bloc responded yesterday evening, saying that the EU is ready to “react firmly and immediately against unjustified barriers to free and fair trade,” increasing concerns about an ensuing trade war.
Tariffs
This announcement is the culmination of a series of tariff threats from Trump towards the EU, which the president has repeatedly criticised for running a high trade surplus with the US, a point repeated yesterday:
“The EU is a different case than Canada, a different kind of case, they've really taken advantage of us in a different way.
“They don't accept our cars, they don't accept essentially our farm products. They use all sorts of reasons why not, and we accept everything from them, and we have about a [US]$300bn (£237bn) deficit with the EU.”
A spokesperson for the European Commission rejected claims that the bloc had disadvantaged the US and other economies: “The EU is the world’s largest free market. And it has been a boon for the United States.”
“We're ready to partner if you play by the rules. But we will also protect our consumers and businesses at every turn. They expect no less from us.”
Retaliation
Asked about the possibility of EU counter tariffs, Trump was unconcerned, telling reporters that “they can't – I mean, they can try, but they can't”.
He then went on to say that “they can retaliate, but it cannot be a successful retaliation, because we just go cold turkey, we don't buy anymore”.
Retaliatory measures have also underpinned Trump’s trade strategy since returning to office. He’s tasked officials with carrying out a wide-ranging investigation of other trade deficits, as well as other countries' tariffs, with a report due 1 April that could lead to the introduction of “reciprocal” measures.
Economic concerns
While Trump rolls out his aggressive trade agenda with gusto, the FT reports that analysts and consumers are growing more wary of the economic implications.
Several consumer surveys have suggested that US consumers have lost confidence in the economy, with two in five respondents from the University of Michigan’s survey of consumer sentiment citing tariffs unprompted.
The survey director, Joanne Hsu, told the publication that confidence had fallen consistently across all metrics – a rarity:
“The declines this month were unanimous across different demographic groups, as well as across multiple dimensions of the economy.
“People are feeling less confident about personal finances, about buying conditions for big-ticket items as well as about business conditions both right now and in the future.”
The Conference Board’s Consumer Confidence Index also fell to its lowest level since 2021, when Covid-19 was still depressing the economy, with tariffs also cited my many respondents as a cause for concern.
