On Saturday, U.S. President Donald Trump rolled out thousands of new tariffs on goods coming in from the European Union (EU) and Mexico. This step further raises trade tensions with these critical partners. The tariffs — which would be applied at the very high rate of 30% — were announced via letters shared on Trump’s social media site, Truth Social. As of 2024, the EU and Mexico are the first and second largest trade partners of the United States.
The joint announcement comes amid heightened tensions between China and the West. Recent trade disputes have advised both Beijing and Brussels to accuse each other. The new tariffs could further complicate negotiations and relationships in the global market, particularly as both regions navigate their respective economic challenges.
In a great quote to NBC News earlier this week, Trump boldly took credit for the tariffs. He claimed they were “extremely well-received,” citing the recent jump in the stock market as evidence. He added, “the stock market reached an all-time high,” indicating that even with the new tariffs on the horizon, investors are still feeling positive on the market.
In response to Trump’s actions, Ursula von der Leyen, president of the European Commission, is expected to voice strong opposition. The new threat of concentrated high tariffs plus fears about workers’ rights to disconnect would make her mad as hell. The EU was recently challenged by China at the WTO over restrictions placed by the EU in public tenders for medical devices. Just a few days ago, this tension further boiled over with Beijing imposing retaliatory import curbs.
Ability to navigate the increasingly challenging international landscape. Just consider the example of China’s recent decision to impose anti-dumping duties on EU brandy. These increasing levels of financial turmoil have certainly raised eyebrows amongst leaders in the financial community. Jamie Dimon, CEO of JPMorgan, remarked during an event at Ireland’s Department of Foreign Affairs that “Europe has gone from 90% U.S. GDP to 65% over 10 or 15 years. That’s not good.” His talk was a reminder of increasing worry over Europe’s crisis in long-term competitiveness with the U.S.
Witnessing swift market reaction to the news, the Stoxx Europe 600 index dropped 1.01% on Friday. On top of that, all three large U.S. stock indexes posted losses over the week as investors prepared for a new flurry of tariffs. It wasn’t just crypto — U.S. stock futures resumed their losses on Sunday evening, contributing to a growing sense of chaos.
One of the longer-term consequences of Trump’s tariffs could be felt even more than the immediate negative economic impacts. Reports suggest that Trump may have the authority to dismiss Federal Reserve Chairman Jerome Powell should he choose to take such drastic measures. This alternate scenario is an even more complicated development to the challenging economic story that’s playing out.