Donald Trump announced on Friday that he would “absolutely” impose tariffs on the European Union as part of a broader move that includes new taxes on imports from China, Mexico, and Canada.
The president has already implemented a 25 per cent tariff on goods from its North American neighbours and a 10 per cent tariff on Chinese products, raising concerns about sparking a global trade war and triggering an inflation crisis.
Although tariffs were expected from day one of his presidency, Trump initially gave Canada, Mexico, and China a brief period to negotiate before any measures took effect.
Speaking from the Oval Office, Trump stated, “Am I going to impose tariffs on the European Union? Do you want a truthful answer or a political one? Absolutely. The European Union has treated us so terribly.”
The United States is the largest individual trading partner for the United Kingdom, although most British trade involves services that higher tariffs would not impact on goods. The UK currently represents just 2 percent of U.S. goods imports.
Meanwhile, the UK’s tech giant tax could potentially draw further ire from Trump, particularly as Sir Keir Starmer intensifies efforts to secure a trade deal.
In response to “false” reports that additional delays might be considered for the tariffs on China, Mexico, and Canada, White House press secretary Karoline Leavitt confirmed that the deadline set for February 1 remains in effect. The president is insisting that these countries take action to curb the influx of illegal migrants and drugs into the United States.
“The president has made his position unmistakably clear: the tariffs will be implemented and enforced,” she stated, noting that Mr. Trump might later choose to reverse the decision.
In response to the announcement, stock markets dropped, while the dollar’s value surged and gold prices reached a historic peak as investors digested the news. However, the overall reaction was somewhat subdued, as the president’s plans had been anticipated for months.
Gold, which has been on an upward trend since the beginning of the year, climbed to an all-time high above $2,800 per ounce on Friday.
The Mexican and Toronto stock exchanges each declined by 0.5% following the White House announcement. The peso dropped by 1% against the dollar, and the Canadian dollar fell by about 10% of its value relative to the US currency shortly after the statement.
According to government data, more than 75% of Canada’s exports head to the US, whereas only 17% of US exports are destined for Canada.
Trump has argued that by imposing tariffs on imported goods, he will force other countries to comply with his demands. He has specifically blamed Canada and Mexico for the flow of drugs and migrants across the US border, while holding China responsible for the fentanyl crisis.
Although Mexico has cooperated with recent migrant deportation flights, it has not yet convinced Trump that it deserves an exemption from tariffs.
