AP – Sweeping new tariffs announced recently by United States (US) President Donald Trump provoked dismay, threats of countermeasures and calls for further negotiations to make trade rules fairer.
But responses were measured, highlighting a lack of appetite among key trading partners for an outright trade war with the world’s biggest economy.
Trump said the import taxes, ranging from 10 per cent to 49 per cent, would do to US trading partners what they have long done to the US. He maintains they will draw factories and jobs back to the US.
“Taxpayers have been ripped off for more than 50 years,” he said. “But it is not going to happen anymore.”
Trump’s announcement of a new 20 per cent tariff on the European Union (EU) drew a sharp rebuke from European Commission President Ursula von der Leyen, who said it was a “major blow to the world economy”.
“The consequences will be dire for millions of people around the globe,” von der Leyen said.
Groceries, transport and medicines will cost more, she said while visiting Uzbekistan, “And this is hurting, in particular, the most vulnerable citizens.”
Von der Leyen acknowledged that the world trading system has “serious deficiencies” and said the EU was ready to negotiate with the US but also was prepared to respond with countermeasures.
NOBODY WANTS A TRADE WAR
British Prime Minister Kier Starmer said the United Kingdom government would react with “cool and calm heads”.
“Clearly, there will be an economic impact,” he said, telling business leaders in London that he hopes to get the tariffs lifted with a trade deal with Washington.
“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 analyse the US tariffs and their impact, Chief Cabinet Secretary Yoshimasa Hayashi said, while refraining from talk of retaliation. But he said the moves would have a big impact on relations with the US.
Italy’s conservative Premier Giorgia Meloni said the higher tariffs would benefit neither side.
“We will do everything we can to work towards an agreement with the US, with the aim of avoiding a trade war that would inevitably weaken the West in favour of other global players,” Meloni said in a Facebook post.
Brazil, hit with a 10-per-cent tariff, said it was considering appealing to the World Trade Organization. Its congress unanimously passed a bill to allow retaliation for any tariffs on Brazilian goods.
BLOW TO THE WORLD ECONOMY
Financial markets were jolted, with US stock futures down by as much as three per cent yesterday and a 2.8-per-cent drop in Tokyo’s benchmark leading losses in Asia. Oil prices sank more than USD2 a barrel.
“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.
While the longer-term ramifications could encompass a dismantling of supply chains built up over decades, a more immediate concern is the higher risk of recession.
“The (average) US tariff rate on all imports is now around 22 per cent, from 2.5 per cent in 2024. That rate was last seen around 1910,” Fitch Ratings’ Head of US Economic Research Olu Sonola said in a report.
“This is a game changer, not only for the US economy but for the global economy. Many countries will likely end up in a recession. You can throw most forecasts out the door, if this tariff rate stays on for an extended period of time,” Sonola said.
The burden falls heaviest on Asia-Pacific nations, with the highest tariffs for impoverished, financially precarious countries like Laos at a 48-per-cent tariff, Cambodia at 49 per cent and Myanmar at 44 per cent.
MINIMISE DAMAGE
Asian countries that are among the biggest exporters to the US pledged to act fast to support automakers and other businesses likely to be affected.
South Korean Prime Minister Han Duck-soo told officials to work with business groups to analyse the impact of the new 25 per cent tariff to “minimise damage”, the trade ministry said.
China’s commerce ministry said Beijing would “resolutely take countermeasures to safeguard its own rights and interests,” without saying exactly what it might do. With earlier rounds of tariffs China reacted by imposing higher duties on US exports of farm products, while limiting exports of minerals used for high-tech industries such as electric vehicles.
“China urges the US to immediately cancel its unilateral tariff measures and properly resolve differences with its trading partners through equal dialogue,” it said.
Mexican President Claudia Sheinbaum said she would wait to see how Trump’s announcement will affect Mexico, which like Canada was spared for goods already qualified under their free trade agreement with the US, though previously announced 25 per cent tariffs on auto imports took effect yesterday.
“It’s not a question of if you impose tariffs on me, I’m going to impose tariffs on you,” she said on Wednesday morning. “Our interest is in strengthening the Mexican economy.”
Canada imposed retaliatory tariffs in response to the 25 per cent tariffs that Trump tied to the trafficking of fentanyl. The EU, in response to the steel and aluminium tariffs, has imposed taxes on EUR26 billion worth (USD28 billion) of US goods.
NO BASIS IN LOGIC
Some countries took issue with the White House’s calculations.
Australian Prime Minister Anthony Albanese said the tariffs were totally unwarranted, but Australia will not retaliate.
“President Trump referred to reciprocal tariffs. A reciprocal tariff would be zero, not 10 per cent,” said Albanese. The US and Australia have a free trade agreement and the US has a USD2-to-USD1 trade surplus with Australia. “This is not the act of a friend.”
Trump said the US bought USD3 billion of Australian beef last year, but Australia would not accept US beef imports. Albanese said the ban on raw US beef was for biosecurity reasons.
A 29-per-cent 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 US,” Norfolk Island Administrator George Plant, the Australian government’s representative on the island, told the AP yesterday.
