US president Donald Trump has threatened to impose tariffs on European countries, following the announcement of a 25% additional import tax on goods from Canada and Mexico, and a 10% additional tariff on imports from China.
According to a White House fact sheet, these additional tariffs were imposed by Trump to ‘hold Mexico, Canada, and China accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into [the USA]’.
Speaking to BBC News, the US president claimed that new tariffs “will definitely happen with the European Union” while tariffs on UK imports “might happen”.
On the reason for introducing these new measures on the EU, Trump said: “They’ve really taken advantage of us. We have over a US$300 billion [trade] deficit. They don’t take our cars, they don’t take our farm products. They take almost nothing, and we take everything from them – millions of cars, tremendous amounts of food and farm products.”
Trump’s latest threat of imposing tariffs on the EU is a continuation of his pre-election warning that the European Union is “going to have to pay a big price” for not buying enough American exports.
According to the latest available data from the European Commission, the US accounted for the biggest proportion of EU exports in 2023, making up 19.7%. Meanwhile, China was the EU’s biggest partner for imports, representing 20.5% of total imports, compared to 13.7% from the US.
Despite Trump’s claim of a trade deficit surpassing $300bn, the United States Trade Representative reported a trade deficit with the EU of $131.3bn in 2022, with no sign of a figure around the $300bn mark in the office’s currently available ‘European Union Trade & Investment Summary’.
Touching on the future of the US’s trade with the UK, he continued: “The European Union is really out of line. The UK is also out of line, but I think that one could be worked out.”
Data from the United States Trade Representative shows that the US goods and services trade with UK totalled an estimated $295.6bn in 2022, with a $20bn trade surplus.
Trump’s “America First” approach to global trade appears to have had an impact on international markets, with reports claiming that shares in Europe and Asia have fallen while the US dollar has strengthened.
On the impact of Trump’s tariffs, Jonathan Jackman, EMEA regional vice president at supply chain solutions provider Kinaxis, commented: “The introduction of tariffs by the incoming US administration will have profound ripple effects on supply chains globally. It is very likely that new tariffs implemented by the US will trigger counter-tariffs resulting in a more complex international trade environment overall.
“Organisations will have a few medium-term options to respond with: onshoring or nearshoring if that’s available; increasing safety stock, which we know some US manufacturers have already started to do; and prioritising core products.
“However, these are not quick solutions, especially if businesses don’t already have diversified supply chains. It is crucial that organisations remain agile and prepare to make transformative changes to their supply chains as quickly as possible.”