Once again, former President Donald Trump has brought international tensions to a boil. He threatened to slap tariffs on a dozen other European countries. This new step represents a furthering of that ambition, along with Trump’s desire to take control of Greenland for the U.S. The European Union (EU) is paying very careful attention. This invites speculation on possible countermeasures that might do much more to affect the balance on both sides of the Atlantic.
This is not his first time threatening unstable tariffs, many refer to this as Trump’s Taco moment. This inconsistency naturally fosters doubt about whether any of these tariffs will materialize. Last year, the U.S. imported more than $365 billion worth of goods from all countries identified as targets for potential action. This is an enormous burden on American consumers and businesses alike.
The Background of Tariff Threats
Perhaps most importantly, the former president’s proposed tariffs would hit precisely the eight Euro countries that have signaled their opposition to his Greenland ambitions. These countries remain incredibly important trading partners for the U.S. Germany, just to take one example, exported more than $160 billion in goods to the United States last year. The United Kingdom and France were next on the list, exporting $68 billion and $60 billion respectively.
These tariffs are being implemented against a backdrop of recently concluded landmark trade negotiations. The EU and U.S. reached a short-term trade agreement last summer. This agreement resulted in a suspension of EU retaliation against U.S. tariffs. As it stands now, this pause will end on February 6. If Trump’s tariffs are implemented the next day, then the European countries will have to respond in kind.
The stakes of these tariffs are considerable. Economists have been sounding alarm bells that they would choke off economic activity and investment inside the U.S., and be inflationary. Other econometric analyses show that past trade skirmishes started by Trump only had a wan impact. This time might be different — because of the scale and the nature of the proposed tariffs.
Potential EU Responses
In response to Trump’s threats, European leaders are considering possible reprisals. France, Germany and others have already made it clear they will retaliate if these tariffs go into effect. French President Emmanuel Macron has indicated that France is preparing to roll out these measures. Similarly, Germany’s finance minister Lars Klingbeil has been supportive of this idea and urging for a coordinated EU response.
The timing of these developments couldn’t be worse. As the suspension of countermeasures comes to an end in the near future, European countries will need to assess their options urgently. Analysts believe that any retaliatory actions would focus on damage to the economy the U.S. tariffs have caused. They hope to demonstrate a common front toward what they are calling predatory trade practices.
“consider using these measures” – Emmanuel Macron
Economic Impact and Public Sentiment
The economic fallout from Trump’s tariff threats is substantial. Under the scenario of blanket tariffs applied to all goods, Germany could experience an erosion of economic output by as much as 0.3%. Such a decline would ripple through the EU economy, affecting not only exporters but consumers who may face increased prices for imported goods.
Public opinion in the U.S. seems to be overwhelmingly against Trump’s dreams of Greenland for many reasons. A recent CNN poll showed that 3 out of 4 Americans don’t support the annexation of Greenland. This gap represents a chasm between Trump’s professed aims for his foreign policy and the public’s mood.
As the story continues to develop, the U.S. Supreme Court is set to take up the ultimate legality of Trump’s planned tariffs. Given the potential scope of its ruling, this might greatly affect how Americans and the world respond to his protectionist trade policies.