European leaders were bracing for U.S. 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, Reuters reported.
Trump said the tariffs against the three largest U.S. trading partners might cause Americans some short-term pain, but "long term, the United States has been ripped off by virtually every country in the world".
"They don t take our cars, they don t take our farm products. They take almost nothing and we take everything from them," he told reporters.
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 meeting at an informal summit in Brussels on Monday said Europe would be prepared to fight back if the U.S. imposes tariffs, but also called for reason and negotiation.
Arriving at the talks, French President Emmanuel Macron said if the EU were attacked in its commercial interests it would have to "make itself respected and thus react". He added that recent declarations from the United States were pushing Europe to be stronger and more united.
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 U.S. but stressed it was better for the two to find agreement on trade.
Luxembourg s Prime Minister Luc Frieden said: "I think tariffs are always bad. Tariffs are bad for trade. Tariffs are bad for the United States."
Trump hinted that Britain, which left the EU in 2020, might be spared tariffs, saying: "I think that one can be worked out".
The U.S. is the EU s largest trade and investment partner and has consistently imported more goods than it has exported to the bloc. The U.S. goods trade deficit stood at 155.8 billion euros ($161.6 billion) in 2023, according to Eurostat data.
However, in services, the U.S. had a surplus of exports over imports with the EU of 104 billion euros.
EU foreign policy chief Kaja Kallas said there were no winners in a trade war, saying that if one broke out between Europe and the United States, "then the one laughing on the side is China".
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The tariffs on Canada, Mexico and China, outlined in three executive orders, are due to take effect 12:01 a.m. 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.
Economists said 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.
Financial market reaction on Monday reflected concerns about the fallout from a trade war. Shares in Tokyo ended 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.
The Chinese yuan, Canadian dollar and Mexican peso all slumped against a soaring dollar. With Canada and Mexico the top sources of U.S. crude oil imports, U.S. oil prices jumped more than 1%, while gasoline futures rose nearly 3%.
Trump s tariffs will cover almost half of all U.S. imports and would require the United States to more than double its own manufacturing output to cover the gap - an unfeasible task in the near term, ING analysts wrote.
Other analysts said the tariffs could throw Canada and Mexico into recession and trigger "stagflation" - high inflation, stagnant growth and elevated unemployment - at home.
In Europe, economists at Deutsche Bank said they were currently factoring in a 0.5% hit to gross domestic product (GDP) should Trump impose 10% tariffs on the bloc.
