President Donald Trump threatened further tariffs on European goods Wednesday after the European Union announced it would impose countermeasures on $28.33 billion worth of U.S. exports. The EU's response comes after the U.S. enacted a 25% tariff on steel and aluminum imports, escalating tensions between Washington and Brussels over trade policy.
Trump, speaking to reporters at the White House, said his administration would enact "reciprocal tariffs" in response to the EU's move. "Whatever they charge us with, we're charging them. Nobody can complain about that," Trump said. Sitting alongside Irish Prime Minister Micheál Martin, Trump reiterated his long-standing claim that the EU was designed "to take advantage of the United States" and criticized Ireland's corporate tax structure, which he blamed for America's trade deficit with the country.
Data from Ireland's Central Statistics Office shows that in 2023, the U.S. had a goods trade deficit of 31 billion euros ($33.8 billion) with Ireland, making it one of the largest imbalances between the two nations. Trump has frequently cited trade deficits as justification for his tariff policies, which have targeted China, Mexico, and Canada but until now had largely spared the European Union.
The European Commission responded to Trump's new tariffs by announcing a two-pronged countermeasure that would include reimposing suspended tariffs on 8 billion euros ($8.7 billion) worth of U.S. goods while adding new duties on an additional 18 billion euros ($19.6 billion) in exports. European Commission President Ursula von der Leyen criticized the U.S. tariffs as "disruptive" and warned they would lead to economic uncertainty on both sides of the Atlantic.
"We deeply regret this measure by [the U.S.] Tariffs are taxes, they are bad for business and worse for consumers," von der Leyen said at a press conference. "They are disrupting supply chains, they bring uncertainty for the economy, jobs are at stake, prices are up and nobody needs that."
Von der Leyen emphasized that the EU remains open to negotiations but that it had no choice but to act. Trade ties between the U.S. and EU are "the biggest in the world," she said, adding that their past economic cooperation had "brought prosperity and security to millions of people."
The escalating trade dispute had an immediate impact on global markets. Britain's FTSE 100 index fell 0.1% on Thursday morning, Germany's DAX dropped 0.4%, and France's CAC 40 slid 0.3%. The pan-European STOXX 600 edged down 0.1%, though markets recovered slightly later in the day.
The trade tensions are also affecting Canada, which announced its own counter-tariffs on U.S. goods worth approximately C$30 billion ($22.1 billion USD). Ontario Premier Doug Ford had initially proposed a 25% surcharge on electricity exports to U.S. states, though he later walked back that plan. Trump's administration had threatened to double tariffs on Canadian steel and aluminum imports to 50%, though that proposal was also retracted.
"A rather tame U.S. inflation report lent some support to markets yesterday, but with investors' concerns focused on the coming impacts of U.S. policy uncertainty and not past inflation, risk assets are back under pressure this morning," said Kyle Chapman, an FX markets analyst at Ballinger Group.
Investors are closely watching the Federal Reserve's upcoming policy meeting next week for indications of future rate cuts. Meanwhile, the White House has signaled it will continue pursuing aggressive trade policies, despite warnings from corporate leaders and international allies about potential economic disruptions.
Trump has repeatedly expressed frustration with European trade policies, arguing that the EU imposes more restrictions on American goods than the U.S. does on European products. "They've really taken advantage of us," Trump said in a February Cabinet meeting, claiming that Europe blocks American cars and farm products while the U.S. allows European imports with fewer restrictions.
The dispute has raised concerns among U.S. businesses that rely on European markets, particularly in sectors such as automotive, agriculture, and manufacturing. According to data from the European Commission, the EU had a goods trade surplus of 155.8 billion euros ($169.8 billion) with the U.S. in 2023 but ran a deficit of 104 billion euros ($113.4 billion) in services trade.
Corporate leaders are bracing for further instability as the tariff battle escalates. Delta Airlines and Walmart have already issued warnings about potential profit declines due to economic uncertainty. Meanwhile, U.S. stock markets closed mixed on Wednesday, with the S&P 500 gaining 0.5%, the NASDAQ 100 rising 1.1%, and the Dow Jones Industrial Average falling 0.2%.
IG noted that "President Trump's new tariffs on steel and aluminum triggered retaliation from Canada and Europe, adding to economic uncertainty," while corporate warnings from major firms further dampened investor sentiment.
