Gibbs

The United States formally imposed sweeping tariffs on imports from China, Canada, and Mexico on March 4, 2025, marking a significant escalation in the trade wars that have been escalating since Donald Trump returned to power. As part of the measures, a 20% tariff was imposed on Chinese products and a 25% tariff on most Canadian and Mexican imports. Major trading partners responded with retaliatory measures, and concerns about the economic consequences have grown.

The first signs of a trade war emerged after Trump's inauguration on January 20. Within weeks, his administration announced its intention to impose new tariffs, arguing that they would serve US economic security, address the fentanyl crisis, and balance unfavorable trade relationships. The initial 10% tariff on Chinese imports was imposed on February 4, but the White House quickly signaled that it expected more stringent measures. In early March, the tariff was raised to 20%, citing Beijing’s failure to curb fentanyl exports.
Canada and Mexico were also included. In early February, Trump announced that he would impose a 25% tariff on most exports from the two countries, as well as a separate 10% tariff on Canadian energy exports, including crude oil, natural gas, and electricity.

The decision quickly sparked an outcry, and leaders from both countries immediately began negotiations to mitigate the economic damage.
Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum both struck compromises and succeeded in delaying the tariffs for a month. Canada has pledged to appoint a “fentanyl commissioner” to coordinate action against drug trafficking, while Mexico has agreed to deploy 10,000 National Guard troops to the border to crack down on smuggling.

However, the US government has deemed these measures insufficient, and on March 4, the tariffs were fully implemented.

Some EU officials have said that the European Union, which is also under attack from Trump, has little room to negotiate. Moreover, the US president has made some clearly hostile statements since then: he justified the existence of the entire EU by saying that its goal is to destroy the US economy and that its trade policy is a “heinous act against the United States”.

After Canada and Mexico complied with US border security requirements, the president still imposed tariffs, making it clear that Europe is not immune to restrictions.

– a source with deep knowledge of the EU trade negotiations told our newspaper.

The EU has no chance of reaching an agreement like the two targeted North American countries: according to a Europol report last year, the United States is clearly the starting point for drug trafficking in Europe and the Commonwealth is the destination.

So Brussels cannot offer to stop the tariffs by joining the war on drugs.

The European Union has been criticized by the Trump administration for its harsh treatment of tech companies: it has opposed regulations for large platform providers and harsh fines targeting Google, Meta and even Apple. Although the parties have discussed these issues in recent weeks, there seems to be no chance of Brussels reaching an agreement by relaxing the provisions of the Digital Services Act (DSA) or the Digital Markets Act (DMA).

Meanwhile, the US side has repeatedly called the obligation of companies to provide data under EU law a violation of freedom of speech.

So far, tariffs seem inevitable and the EU has responded with readiness, said an EU diplomat.

Countries that have been hit are fighting back.
The response from countries that have imposed tariffs has not been slow. China has announced immediate countermeasures, including new tariffs on US agricultural products and restrictions on access to the Chinese market for US companies.
Canada, which had previously sought a negotiated solution, has imposed 25% tariffs on $20.7 billion worth of US imports and warned that further measures could be taken if Washington refuses to renegotiate the tariffs.

Mexico has yet to take any retaliatory measures, but the government has indicated that it is considering possible options.

The economic consequences are already being felt. The auto industry, which relies heavily on supply chains between the United States, Canada and Mexico, could see significant cost increases, while American consumers could face higher prices for electronics and food.

The US energy sector is also under pressure as Canadian oil exports become more expensive. International markets are also increasingly uncertain, with stock markets plunging on news of the tariffs.

Little is known about what awaits Europe: Trump has previously hinted that he intends to impose a 25% tariff on imports from the EU, citing the European Union's longstanding discrimination against US companies.

The US president has also said he will impose retaliatory tariffs: on a reciprocal basis, the tariffs on affected products would be similar to those on US imports to Europe.
The president has also classified certain taxes as tariffs, such as imposing a European VAT on US products imported into the United States.

Although the European Union has said it is seeking a negotiated solution to the conflict, Brussels has drawn up a number of possible packages of measures against the United States, preparing retaliatory strikes of various types and sizes.

Some EU officials have talked about the possibility of using the Anti-Coercion Instrument (ACI). This gives Brussels a number of economic tools. Key steps could include imposing tariffs and other restrictions on US exports, tightening investment rules for US companies, and introducing sectoral sanctions or export bans.

Brussels’ decisive action is justified by the fact that the European auto industry is particularly at risk. Trump not only sees the EU’s current 10% tariff as unfair, but as mentioned, he also sees the VAT system as a trade barrier.

One of the biggest victims could be German automaker BMW, which will soon open a factory in Hungary in Debrecen, and its South Carolina plant exports more than 220,000 cars a year. Tariff increases could hit not only European automakers but also the US labor market, especially since BMW’s factory is located in South Carolina, a state that supported Trump.

Analysts estimate that a tariff war would cause serious economic damage to both sides.

According to a forecast by the German economic research institute, the Kiel Institute, these tariffs could reduce EU exports to the US by 15-17%, resulting in a 0.4% decline in the EU economy. The impact on the US economy would be slightly smaller, with a GDP reduction of around 0.17%. In addition, retaliatory tariffs imposed by the EU could exacerbate the situation, adding 1.5 percentage points to US inflation.
Germany, the EU's largest economy, is particularly affected. According to Bundesbank forecasts, German GDP could fall by as much as 1.3-1.4% by 2027 if the US imposes tariffs. In addition, unemployment is expected to rise, exceeding 3 million for the first time in 14 years, and unemployment could rise to 6.3% by 2025.
Since Central European countries – such as the Czech Republic, Hungary, Slovakia, Slovenia and Romania – are Germany's most important trading partners and key players in the supply chains of German companies in the region, they are also vulnerable to the trade war.
According to S&P Global Ratings, the economic growth of these countries could fall by an average of 0.5-0.9 percent due to the US tariff plans.

The world will be able to get a definitive answer about what will happen in the future of the EU-US trade conflict no later than Wednesday, March 12: as promised, Donald Trump will reimpose tariffs on steel and aluminum, and may impose even broader measures from April.

__________________