“The European Union hit back hard as U.S. President Donald Trump imposed 25 percent global steel and aluminum tariffs on Wednesday, announcing a two-stage retaliation covering €26 billion in EU exports that far exceeded a trade fight that blew up in his first term.
The European Commission said it would, from April 1, reimpose tariffs in response to €8 billion in U.S. tariffs — including on iconic American products such as Harley-Davidson motorcycles, bourbon and jeans. And, from mid-April, it will set further countermeasures over €18 billion in new U.S. tariffs, subject to the approval of EU member states.
“We deeply regret this measure,” European Commission President Ursula von der Leyen said in an early-morning statement.”
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“The 27-nation bloc — a common market spanning 450 million people — wants to send an unmistakable message that the EU is serious about defending its economic interests should Trump launch a full-scale trade war.”
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“The Commission left the door open to a deal with Trump, saying it “remains ready to work with the U.S. administration to find a negotiated solution” and adding that its measures “can be reversed at any time should such a solution be found.””
An immediate impact of tariffs is increased prices. Paying more means less money for other purchases and investments. Less purchases and investments means a smaller economy than there otherwise would be. A smaller economy means less wealth and jobs for most people.
“Trump and his allies believe tariffs are the key to all sorts of wondrous economic outcomes that will make America more prosperous. In his speech to Congress on Tuesday night, Trump said that tariffs “are about protecting the soul of our country,” whatever that means.
But even if you buy those arguments, it should be obvious that tariffs being implemented and then immediately withdrawn (for the second month in a row) will not produce the promised benefits.
They won’t generate revenue for the government, won’t cause businesses to alter their supply chains, and won’t stop the flow of illegal drugs. It’s the equivalent of looking at a river, declaring your intention to build a dam, and then expecting the river to become a reservoir.”
“The trade deficit is huge. It stands at $235.6 billion — a 12.9 percent increase since 2023. EU countries impose an average 5 percent tariff on U.S. goods, while the U.S. imposes an average 3.3 percent tariff on European goods. Even worse, the EU collects a 10 percent tariff on car imports — that’s four times America’s 2.5 percent.”
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“This has to change — and it can — but not through a tit-for-tat race to higher tariffs. Rather, we need to lower tariffs and observe symmetry. Ideally, EU-U.S. trade would be tariff-free. However, if that’s unachievable, tariffs should be, on average, 2 percent on both sides. That would create a huge stimulus for both economies, and it could be the basis and precondition for what is existentially necessary: a common trade strategy on China.”
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“If Trump is serious about “America First,” there’s one thing he should come to terms with — it shouldn’t mean “America Alone.” More leverage at the negotiating table with China, a healthy U.S. economy without inflation, and a prosperous Germany that could turn around a stumbling EU would be in the interest of the American people and Europe.”
“Part of his administration’s solution to the high price of eggs? More imports. As part of a $1 billion plan to combat the bird flu, the U.S. Department of Agriculture (USDA) announced..that it would seek to expand imports of eggs”
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“A sudden constraint on supply—in this case, the bird flu—has pushed prices higher, and finding alternative suppliers might help ease the pain.
Now, someone in the White House might want to apply that same analysis to Trump’s plan for more tariffs on two of America’s biggest food suppliers.
Trump backed down from his threats to slap 25 percent tariffs on all imports from Canada and Mexico earlier this month, but at the time, he said those tariffs were merely delayed by 30 days.”
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“Canada and Mexico accounted for 28 percent of all imports to the U.S. last year. If the costs of Trump’s tariffs are fully passed down the supply chain, consumers could be facing $225 billion in higher costs, according to an estimate by the American Action Forum (AAF). The energy and manufacturing sectors figure to be the hardest hit, thanks to the deeply integrated North American supply chains for products ranging from crude oil to critical minerals like cobalt and zinc.
Food prices would likely rise too. The U.S. imports more food than ever before, Bloomberg noted this week, and many of those imports come from America’s two neighbors. Mexico is America’s largest source of agricultural imports, according to the USDA. That includes 63 percent of U.S. vegetable imports and 47 percent of U.S. fruit and nut imports. All of that would be affected by the new tariffs.”
“the way we think about how China would overrun Taiwan may well be wrong. Rather than an all-out invasion, it could attempt to capture the island without firing a single shot through “gray zone” tactics. Such tactics might combine maritime blockades and advanced cyberwarfare capable of cutting off Taiwan from the lines of seaborne trade and the digital access it needs to survive. And Beijing could do so in a way that might be just far enough below the threshold of conflict that would drive Washington and its allies to come to Taiwan’s aid.”
“The economic uncertainty created by Trump’s tariff threats has already warped markets and harmed the economy in ways large and small.”
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“Uncertainty created by Trump’s trade policies reduced aggregate U.S. investment by as much as $47 billion in 2018, according to a 2020 study in the Journal of Monetary Economics.
The authors of that paper wrote that “all measures suggest that uncertainty about trade policy has recently shot up to levels not seen since the 1970s.” They concluded that “both higher expected tariffs and increased uncertainty about future tariffs deters investment.””
“These tariffs will protect American steelmakers and aluminum manufacturers from competition but at the expense of other American manufacturers that buy steel and aluminum to produce finished goods.
Unfortunately, there are a lot more jobs in the latter camp than in the former.”
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“The Peterson Institute for International Economics calculated that the costs of Trump’s 2018 steel tariffs totaled about $650,000 per job created. If this is an economic development scheme for American manufacturing, it’s a pretty terrible one.
Farther downstream, consumers will be hurt too. When Trump hiked tariffs on steel and aluminum imports during his first term, those import duties translated into price increases of 2.4 percent for steel and 1.6 percent for aluminum, according to a 2023 study by the U.S. International Trade Commission.
That might not sound like a lot, but there are several reasons to expect a more significant hit this time around.
For one, Trump is now raising tariffs on both metals to 25 percent. His first-term tariffs were 25 percent on steel but only 10 percent on aluminum.
The impact of the steel and aluminum tariffs imposed during Trump’s first term was also blunted by the wide variety of carve-outs and loopholes that the administration created. Companies affected by the tariffs could apply for exemptions—and the process for deciding who got those breaks was, unsurprisingly, opaque and political.”
“The U.S. is the second-largest steel importer in the world, according to the International Trade Administration. In 2023, the U.S. imported 25.6 million metric tons of steel and exported a little more than 8.2 million metric tons. About half of the aluminum used domestically is imported and by global standards, the U.S. has a very small aluminum smelting industry. Steel and aluminum imports to the U.S. were valued at nearly $50 billion in 2024, per Bloomberg.”
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“Imposing levies on steel and aluminum will increase costs for domestic energy projects (which will be passed on to consumers) while hamstringing America’s energy dominance. In recent years, high material costs (and burdensome regulations) have led to cancellations or price tag hikes for offshore wind energy, advanced nuclear power, and transmission line projects. Instead of building oil pipelines to the U.S., these trade barriers could also incentivize Canadian energy companies to invest in other markets, such as Japan, says Wayne Winegarden, an economist at the Pacific Research Institute, a free market think tank. “This really is one of the dumbest things we could be doing,” Winegarden tells Reason.
Importantly, these tariffs won’t accomplish Trump’s stated goal of “making America rich again.”
A study from the International Trade Commission found tariffs on steel (25 percent) and aluminum (10 percent) implemented during the first Trump administration decreased production and increased costs in downstream industries that use these materials by 0.6 percent and 0.2 percent, respectively. Total production in downstream industries was $3.5 billion less in 2021 because of these tariffs. The Tax Foundation estimates that repealing tariffs and their quotas would increase long-run gross domestic product by $3.5 billion and create thousands of jobs.”
“President Donald Trump on Thursday signed his plan for reciprocal tariffs but delayed their implementation as his administration launches negotiations on a one-by-one basis with nations that could be impacted.
“The Plan shall ensure comprehensive fairness and balance across the international trading system,” read the memorandum signed by Trump.
The studies of each country could be completed by April 1, incoming Commerce Secretary Howard Lutnick said Thursday while standing at Trump’s side, adding that then “we’ll hand the president the opportunity” to start implementing them as soon as on April 2.”
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“Nations from India to Brazil to South Korea have long charged higher average duties on various goods and will clearly be in the middle of coming talks.
Trump’s memo Thursday outlined how non-tariff barriers, such as the VAT, would also be subject to reciprocity.
“For purposes of this United States Policy, we will consider Countries that use the VAT System, which is far more punitive than a Tariff, to be similar to that of a Tariff,” Trump posted to Truth Social on Thursday.
That issue is likely to be a sizable stumbling block in relations with the European Union.”
LC: VATs are applied to domestic products and imports, so treating a VAT like an import tariff that is just applied to the import, makes no sense.