With Trump’s Tariffs, the Chasm Between Allies and the U.S. Widens
President Trump’s announcement of sweeping tariffs on America’s trading partners has widened the rift between the United States and some of its closest allies while reconfiguring the global economic order.
Mr. Trump’s plan, which he unveiled on Wednesday and is calling “reciprocal,” would impose a wave of tariffs on dozens of countries. Among America’s most important trading partners affected were the European Union, which will face 20 percent tariffs under the plan, and China, which will absorb an additional 34 percent on top of existing levies.
The new tariffs represent “a major blow to the world economy,” Ursula von der Leyen, the president of the European Commission, said in a press statement early on Thursday morning. “The global economy will massively suffer. Uncertainty will spiral, and trigger the rise of further protectionism.”
Mexico and Canada, who have especially close economic relationships with the United States, would not be subject to any new tariffs beyond the levies the president had previously announced, on imported vehicles, vehicle parts, steel, aluminum and any other goods not traded under the rules of the U.S.-Mexico-Canada Agreement.
The new levies include a base line 10 percent tariff on all countries except Canada and Mexico, as well as additional tariffs based on the tariffs other nations apply to U.S. exports and other barriers the administration has deemed unfair.
Asian countries were some of the hardest hit. Tariffs on Japan and India will be more than 20 percent, with nations like Vietnam, Cambodia, Bangladesh and Sri Lanka facing even steeper rates.
Exiger, a data analytics firm, calculated that the burden could fall heaviest on Chinese exports, which would face $149 billion in additional tariffs, while Vietnamese goods would face $63 billion, Taiwanese products $37 billion and Japanese goods $36 billion in tariffs. The firm called the announcement a “monumental policy shift that will reshape sourcing, pricing and geopolitical strategy.”
The many-fronted assault has left global partners reeling.
“The consequences will be dire for millions of people around the globe,” Ms. von der Leyen said in her statement early Thursday morning. “There seems to be no order in the disorder, no clear path to the complexity and chaos that is being created.”
European allies have announced plans to retaliate to an earlier wave of steel and aluminum tariffs, and they have been clear that they will respond to the growing trade conflict with further measures if negotiations fail — including, potentially, by creating barriers for services like big technology companies.
The E.U.’s response is relevant because, taken as a whole, its 27 nations make up what is arguably America’s most important economic relationship: They alone send nearly a fifth of American imports, and European consumers are a huge market for American services.
Others have taken a more wait-and-see approach.
Prime Minister Anthony Albanese of Australia said the United States imposing 10 percent tariffs on the country had “no basis in logic.” But Australia would not race to retaliate, he said, saying the country would not “join a race to the bottom that leads to higher prices and slower growth.”
In Mexico and Canada, there was a sense of muted relief at avoiding a new spate of tariffs. “This is good news for the country,” said Luis de la Calle, a top Mexican trade economist. “It allows us to safeguard our access to U.S. markets.”
But analysts cautioned against too much optimism, since both countries are already facing a slew of levies imposed recently. Mr. Trump has said tariffs on Canada and Mexico are intended to curb the flow of fentanyl into the United States.
“He has preserved a number of important elements of our relationship,” said Prime Minister Mark Carney of Canada, “but the fentanyl tariffs still remain in place.” Mr. Carney, who spoke briefly while on his way to a cabinet meeting, added: “We’re going to fight these tariffs with countermeasures.”
The common thread is that many of America’s friends increasingly find themselves playing defense against Washington, a posture that could change international relations and the global order for years to come.
And many are questioning what the end goals might be.
Mr. Trump has at times argued that he wants to force companies including automakers and drugmakers to produce in the United States. He has also said that the point is simply to rectify unfairness. And he has said tariffs will help to pay for tax cuts.
For America’s global partners, the purpose matters. If the point is to make the trading system more fair, that would suggest an openness to negotiation. Europe could fiddle with any tariffs on cars, for instance, to try to press the Trump administration to take a less aggressive stance.
If the point is to raise money for American coffers, that’s a more difficult starting point for trading partners. In that case, finding an agreement that reduces the planned tariffs would mean reducing any potential revenues.
Given the uncertainty, America’s allies have been trying to learn as much as they can about what’s coming, while rolling out measured responses.
Europe, for instance, has taken a more aggressive posture than many individual nations — announcing plans for retaliatory tariffs on whiskey, motorcycles, farm goods and a wide range of other products in response to steel and aluminum levies. But it has already delayed those measures until the middle of April, and policymakers have yet to announce exactly how they will react to the latest round of tariffs.
Instead, officials have made it clear that they are willing to respond forcefully — including, perhaps, by using a recently created tool that would allow them to relatively quickly place penalties like tariffs or market access restrictions on American technology companies.
The goal would be to gain leverage. E.U. nations are trying to throw around the weight of the bloc’s consumer market to force Washington to negotiate.
But plans to push back have been made more difficult because other geopolitical topics have become closely interlinked to the trade conflict.
For instance, military goals and technology regulation have become caught up in broader debates about trade.
Nations which might want to push back on the new tariffs — including Japan, South Korea and Europe — are dealing with the risk that America will pull back from its longstanding military role. Mr. Trump has been urging countries to shoulder more of the burden for their own defense.
Mr. Trump also wants Europe in particular to dial back restrictions on large technology companies, including regulations meant to ensure that they are enforcing content standards, and has taken aim at the E.U.’s consumption tax system.
The question is how quickly America’s trading partners will now respond. European leaders, for instance, have made it clear that they first want to digest the details of the latest round of tariffs.
But they have also been clear that they will hit back if all else fails.
“They don’t want to escalate — the desire is to do deals,” said Mujtaba Rahman, managing director for Europe at the Eurasia Group, a political research firm. But, he added, “you’ve got to flex economic muscle to be credible with this administration.”
Paulina Villegas contributed reporting from Mexico City; Ian Austen from Windsor, Ontario; and Victoria Kim from Canberra, Australia.
