- President Trump announced new tariffs, ieInclusion of 10% blankets on all countries and sharper measures in key trade countries such as China, EU, India and Japan, which also encourages retaliation and negotiation offers. Analysts expect negotiations, but warn of economic slowdowns and further escalation, adding that the EU has added a new weapon to its arsenal if necessary as a “last means”.
If you hoped that “Liberation Day” would bring a certain resolution Tariff’s narrative of President Donald Trumpyou would make a mistake.
While Trump stood yesterday in the garden of the roses and announced a combination From specific tariffs to key trade partners and blankets 10% increase to all other countries, leaders have prepared their answers around the world.
Some, like British Prime Minister Sir Keir Starmer, said that the White House was acting in the best interests of the US – he – he promised to do the same For Britain with a “cold head”. Others, like the European Commission President, Ursula von der Leyen, promised Swift and continued retaliation.
“We are already completing the first counter -measuring package in response to steel tariffs,” Ua said statement Issued on April 2. “And now we are preparing for further countermeasures to protect our interests and our business if negotiations fail.”
China – now confronted with a cumulative 54% of export duties – forced an oval office to “immediately cancel the” executive order, adding it to many other countries “strongly dissatisfied with” “unilateral harassment practice.”
The scene, therefore, is set up to escalate a trade war – even if some players are afraid of such escalation.
In the note this morning saw WealthUBS said that in the next quarterly, the tariffs would be expected to be recorded for some nations, and for others they increased.
“In our basic case, we would expect the tariffs to reduce from the levels the president has announced,” wrote Mark Haefele, CEO of investment in UBS. “The president himself called for negotiations, and the Minister of Treasury Bessent said in a Bloomberg’s interview that the announced tariffs were” high end of the number “and that the countries could take steps to overthrow the tariffs. However, this procedure is likely to take time.
“And in the short term, the US principle that impose” reciprocal “tariffs could even mean that some tariff rates are increased if other countries of revenge.”
This warning was echoed by Jim Reid from Deutsche Bank, who wrote in the note on Wednesday: “Trump comments left open doors for potential negotiations to lower the tariff, but his executive order also left room for further escalation, saying that the president can further” increase or expand the extent of the imposed “if any trade.”
President Trump has not only refused to exclude the possibility that the tariffs can bounce even more than their current levels – he threatened it himself.
A Republican politician previously wrote on his social media platform, the truth of Social, that if the EU and Canada work together against American interest, they would Hiking faces “far greater” of those announced on April 2.
On top of that, the speech of Trump President on April 2. He barely sounded like a door closing to any further measures.
He called the current measures “a friend and enemy” the same as “kind reciprocal,” adding, “This is not full of reciprocal.”
Haefele added that he expects to slow down the tariff in the economy to see Q2 and Q3 from 2025, adding: “The actions of Trump administration have already increased the effective now -now -2.5% to approximately 9.0%, which has been the highest since World War II.
“Our initial estimates suggest that the announcements on Wednesday will bring an effective tariff rate of about 15 percentage points higher, up to about 25%. Even if the tariffs are ultimately reduced by the end of the year, short -term shock and associated uncertainty are likely to stimulate the short -term slowdown of the US economy and reduce the growth of the year 2025 to or below 1%.
How could other countries answer?
One of the most prominent titles Since the announcement on April 2. It was yes EU now faces a 20% tariff. A key trade ally of Uncle Sam was missed in the first few rounds of tariff, which saw sanctions set up in China, Mexico, and Canada.
The criticism of President Trump for “beautiful European small countries” was reinforced on the eve of the announcement on Wednesday, despite the amount of trade of goods and services between the US -A EU, which surpassed more than $ 1.5 trillion a year.
Already analysts speculate on how the EU will react while European politicians express their dismay President Trump’s trade war.
Filippo Taddei Goldman Sachsa analyzed the potential measures that could take the trading block, writing in a note he sees Wealth: “In our opinion, the EU will devise its trade policy retaliation after three main criteria: in” value conditions “against product specific tariff (steel, aluminum, critical import and car), in the” tariff rate “on the wider reciprocal tariffs … and on services thanks to new instruments of politics.”
Taddei added that the goods chosen for the product specific to the product will first work from a targeted export list in the US before adding a further list of items that could be replaced by other trade partners.
One area where the EU could harm the US -in in services. The EU has a trade surplus with the USA on the goods, worth $ 173 billion (157 billion euros), while We hold the excess to services, It is worth $ 117 billion (109 billion euros).
Therefore, this is in the services – the area where US companies are largely relying on European customers – where the EU could hit the hardest.
“In our opinion, the EU will try as much as possible to design trade tension,” he added. “However, unlike the 2018-20 trade war, the EU is now equipped with a tools for policy to expand the range of retaliation range against US tariffs to target US services. We estimate that this last means that the EU Commission would only consider if the US administration decides for a wide aggressive commercial policy against Europe.”
This story is originally shown on Fortune.com
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