US President Donald Trump has vowed to respond to the European Union’s retaliatory tariffs against his administration’s 25% levies on steel and aluminium, escalating global trade tensions.
Speaking at the White House on Wednesday, 12 March, Trump did not specify the nature of his response but asserted: “Of course, I am going to respond.”
Trump also threatened to double tariffs on Canadian steel and aluminium to 50% before settling on the 25% rate after Ontario suspended an electricity surcharge on US imports earlier in the day.
Trade Responses from Global Partners
The EU immediately imposed tariffs on €26 billion worth of US goods, mirroring the economic scale of Washington’s duties. Brussels also announced plans to reinstate countermeasures from 2018 and 2020, targeting €8 billion in US goods from 1 April, followed by an additional €18 billion in mid-April.
The European Commission condemned the US tariffs as “unjustified, disruptive to transatlantic trade, and harmful to businesses and consumers.” It reiterated its willingness to negotiate a resolution, stating that its countermeasures could be reversed if an agreement were reached.
Canada also implemented retaliatory measures, imposing 25% duties on US-made goods valued at C$30 billion (€19 billion), effective from midnight New York time on Thursday. Ottawa’s tariffs, which match the US levies “dollar for dollar,” affect C$12.6 billion (€8.05 billion) worth of steel, C$3 billion (€1.9 billion) in aluminium, and C$14.2 billion (€9.1 billion) in other products. Canada remains the largest steel exporter to the US, followed by Mexico, Brazil, and China.
Other nations have not announced immediate countermeasures but signalled a willingness to negotiate. UK Prime Minister Keir Starmer said Britain would “keep all options on the table” and was working on a broader economic deal that would include tariffs. Australian Prime Minister Anthony Albanese criticised the tariffs as “entirely unjustified,” while China refrained from direct comment but stated that the US “owed a big thank you” for Beijing’s efforts in controlling the fentanyl trade.
Market Reactions and Economic Outlook
Despite escalating trade tensions, US financial markets rebounded on Wednesday following the release of lower-than-expected inflation data. The S&P 500 rose by 0.5%, recovering from a near-correction phase this year, with major technology stocks leading the gains. The US dollar weakened against most G-10 currencies amid speculation that the Federal Reserve might cut interest rates sooner due to economic concerns.
Analysts, however, warned that market optimism might be short-lived. Michael Brown, a senior research analyst at Pepperstone, stated that he expected gold prices to rise as investors sought safe-haven assets.
Meanwhile, European markets outperformed global peers on expectations that fiscal rules on defence spending would be eased. Ukrainian President Volodymyr Zelenskyy announced a 30-day ceasefire agreement with Russia, contributing to market optimism. The euro remained strong against the US dollar, trading just below 1.09, a four-month high.
In Asia, market reactions were mixed. Japan’s Nikkei 225 and South Korea’s Kospi gained, while Australia’s ASX 200 and China’s Hang Seng Index declined in early Thursday trading.
With trade tensions continuing to mount, businesses on both sides of the Atlantic are bracing for further economic uncertainty. While the EU and Canada have left the door open for negotiations, Trump’s statements indicate that his administration remains committed to its aggressive trade stance.
