Brussels, Belgium/Paris, France/Tokyo, Japan – Europe’s top trade official will speak with US counterparts on Friday, as countries around the world figured out how to respond to President Donald Trump’s tariff hammer blow that has fed fears of recession and triggered a global stock rout.
Nations from Canada to China have readied retaliation in an escalating trade war after Trump raised tariff barriers to their highest level in more than a century this week, leading to a plunge in world financial markets.
In Japan, one of United States’ top trading partners, Prime Minister Shigeru Ishiba said that the tariffs had created a “national crisis” as a plunge in banking shares on Friday set Tokyo’s stock market on course for its worst week in years.
Investment bank JP Morgan said it now sees a 60% chance of the global economy entering recession by year end, up from 40% previously.
With European shares also heading for the biggest weekly loss in three years, the European Union’s trade commissioner Maros Sefcovic will speak to US counterparts.
“The EU will respond in a calm, carefully phased, and above all, unified way, as we calibrate our response,” he said on social media. “We will not shoot from the hip – we want to give negotiations every chance to succeed to find a fair deal, to the benefit of both sides.”
The EU is divided on how best to respond to Trump’s tariffs, including on use of its “Anti-Coercion Instrument,” which allows the bloc to retaliate against third countries that put economic pressure on EU members to change their policies.
Countries that are cautious about retaliating and thereby raising the stakes in the standoff with the US include Ireland, Italy, Poland and the Scandinavian nations.
The European Commission is nevertheless trying to finalize a list of US imports worth up to 26 billion euros ($28 billion) on which to place retaliatory tariffs in response to U.S. tariffs on steel and aluminium.
The Commission, which coordinates trade policy for the EU’s 27 members, has still to work out how best to respond to the sweeping tariffs announced by Trump this week and an earlier announcement on car tariffs.
French President Emmanuel Macron led the charge on Thursday by calling on companies to freeze investment in the US.
\”Investments to come or investments announced in recent weeks should be suspended until things are clarified with the United States,\” Macron said during a meeting with French industry representatives.
However, French Finance Minister Eric Lombard later cautioned against like-for-like countermeasures on the US tariffs, warning this would also rebound on European consumers.
“We are working on a package of responses that can go well beyond tariffs, in order, once again, to bring the US to the negotiating table and reach a fair agreement,” Lombard said in an interview with broadcaster BFM TV.
Mixed signals
There were conflicting messages from the White House about whether the tariffs were meant to be permanent or were a tactic to win concessions, with Trump saying they “give us great power to negotiate.”
The US tariffs could jack up the price for US shoppers of everything from cannabis to running shoes to Apple’s iPhone. A high-end iPhone could cost nearly $2,300 if Apple passes the costs on to consumers, based on projections from Rosenblatt Securities.
Businesses have raced to adjust. Automaker Stellantis said it would temporarily lay off US workers and close plants in Canada and Mexico, while General Motors GM.N said it would increase US production.
Canadian Prime Minister Mark Carney said the United States had abandoned its historic role as a champion of international economic cooperation.
\”The global economy is fundamentally different today than it was yesterday,\” he said as he announced several countermeasures.
Elsewhere, China vowed retaliation for Trump’s 54% tariffs on imports from the world’s No. 2 economy. The European Union faces a 20% duty.
Other trading partners, including Japan, South Korea, Mexico and India, said they would hold off on any retaliation for now as they seek concessions. Britain’s foreign minister said it was working to strike an economic deal with the United States.
Stocks suffered a global meltdown, the US dollar crumbled and oil prices were set for their worst week in months as analysts warned the tariffs could dent demand, upend supply chains and hurt corporate profits.
American companies with significant overseas production took a hit. Nike shares lost 14% and Apple fell 9%.
Trump says the “reciprocal” tariffs are a response to barriers put on US goods, while administration officials said the tariffs would create manufacturing jobs at home and open up export markets abroad, although they cautioned it would take time to see results.
The US president could still step back as the tariffs are not due to take effect until April 9, but few observers were optimistic.
“The tariff plan does not appear to be well thought-out. Trade negotiations are a highly technical discipline, and in our view these proposals do not offer a serious basis for negotiations with any country,” said James Lucier, founding partner at Capital Alpha.
