Global Trade War Looms as US Imposes Tariffs on Mexico, Canada, and China
Washington/Brussels: European leaders are bracing for US tariffs on Monday after President Donald Trump imposed sweeping levies on Mexico, Canada, and China that will affect billions of dollars worth of trade, roiling global markets and currencies.
Global Stock Markets Tumble
Global stock markets and currencies tumbled on Monday on concerns that the tariffs would trigger an economically damaging trade war. The pan-European STOXX 600 index fell 1.3% in morning trading, set for its biggest one-day slide this year, and futures for Wall Street’s S&P 500 fell 1.4%.
EU Leaders Unite Against Tariffs
EU leaders meeting at an informal summit in Brussels on Monday said Europe would be prepared to fight back if the US imposes tariffs, but also called for reason and negotiation. French President Emmanuel Macron said if the EU were attacked in its commercial interests it would have to "make itself respected and thus react." Chancellor Olaf Scholz of Germany, the EU’s largest economy, which is highly dependent on exports, also said the bloc could respond if necessary with its own tariffs against the US, but stressed it was better for the two to find agreement on trade.
Tariffs Take Effect on Tuesday
The tariffs on Canada, Mexico, and China, outlined in three executive orders, are due to take effect 12:01 a.m. ET (0501 GMT) on Tuesday. Trump said he would speak on Monday with the leaders of Canada and Mexico, which have both announced retaliatory tariffs of their own, but downplayed expectations that they would change his mind.
Economic Impact
Economists say the Republican president’s plan to impose 25% tariffs on Canada and Mexico and 10% tariffs on China would slow global growth and drive prices higher for Americans. Trump says they are needed to curb immigration and narcotics trafficking and spur domestic industries. Financial market reaction on Monday reflected concerns about the fallout from a trade war, with shares in Tokyo ending the day down almost 3% and Australia’s benchmark – often a proxy trade for Chinese markets – dropped 1.8%. The mainland China market was shut for Lunar New Year holidays.
EU-US Trade Relations at Risk
The US is the EU’s largest trade and investment partner, with a goods trade deficit of 155.8 billion euros ($161.6 billion) in 2023, according to Eurostat data. However, in services, the US has a surplus of exports over imports with the EU of 104 billion euros.
Conclusion
The imposition of tariffs on Mexico, Canada, and China is a significant step by the US, which could have far-reaching consequences for global trade and the economy. As the situation unfolds, it is crucial for all parties involved to engage in constructive dialogue and find a mutually beneficial solution to avoid a trade war.
Frequently Asked Questions
Q: What are the tariffs imposed by the US on Mexico, Canada, and China?
A: The tariffs are 25% on Canada and Mexico, and 10% on China.
Q: When do the tariffs take effect?
A: The tariffs take effect on Tuesday, at 12:01 a.m. ET (0501 GMT).
Q: What are the potential economic impacts of the tariffs?
A: The tariffs could slow global growth, drive prices higher for Americans, and potentially throw Canada and Mexico into recession.
Q: How have global stock markets reacted to the news?
A: Global stock markets have tumbled, with the pan-European STOXX 600 index falling 1.3% in morning trading, and futures for Wall Street’s S&P 500 falling 1.4%.