Trump delivers fresh tariff threats against EU, China

U.S. President Donald Trump, on his first full day in office, announced sweeping tariff threats targeting the European Union, China, Canada, and Mexico.

Trump said his administration is considering duties as high as 25% for Canada and Mexico, and 10% on Chinese imports, citing illegal fentanyl trafficking as a primary concern.

Tariff plans and trade criticisms

Speaking at the White House on Tuesday, Trump described the EU’s trade practices as “very, very bad” and said imposing tariffs was necessary to ensure fairness.

U.S. President Donald Trump delivers remarks on AI infrastructure, next to Oracle co-founder Larry Ellison, SoftBank CEO Masayoshi Son and OpenAI CEO Sam Altman at the Roosevelt room at White House in Washington, U.S., January 21, 2025.Reuters

He repeated his claims of troubling trade surpluses with the U.S. and described tariffs as “the only way” to address these issues.

Trump had previously promised immediate tariffs during his campaign but instead gave a new deadline of February 1 to finalize the measures.

Fentanyl and border concerns

The president linked the tariff threats against Canada and Mexico to the flow of illegal migrants and fentanyl across U.S. borders.

White House trade adviser Peter Navarro highlighted the urgency, saying, “300 Americans die every day” from fentanyl overdoses. Trump also accused China of shipping fentanyl precursors via Mexico and Canada, aligning with his proposed duties on Chinese goods.

China responded with a measured tone, expressing a willingness to maintain dialogue while opposing any escalation. “There is no winner in a trade war or tariff war,” said Mao Ning, a foreign ministry spokesperson.

Immigration crackdown and trade review

On Monday, Trump signed a trade memorandum directing federal agencies to conduct comprehensive reviews of trade deficits, unfair practices, and currency manipulation.

The memo set an April 1 deadline for recommendations, including a potential “global supplemental tariff” and adjustments to the $800 de minimis duty-free exemption, which is blamed for enabling illicit fentanyl imports.

The administration’s measured approach has fueled debates within Trump’s cabinet on balancing aggressive tariff policies with legal and economic considerations.

Economic and market reactions

While Trump’s measured tone initially boosted markets, pushing the S&P 500 index to a one-month high, his renewed tariff threats against China and the EU have dampened investor optimism.

Trade expert William Reinsch noted, “Trump likely decided to go slower to ensure a firmer legal foundation for these actions.”

Mexico and Canada respond

Mexican President Claudia Sheinbaum emphasized sovereignty, stating that any response would be measured “step by step.”

FILE:\u00a0Mexico's President Claudia Sheinbaum holds her first press conference at the National Palace, in Mexico City, Mexico, October 2, 2024. Reuters

She ruled out renegotiating the USMCA trade agreement, which governs $1.8 trillion in annual trade, until 2026.

Corn farmers in the U.S. expressed concern over potential disruptions to exports. Mexico is the top buyer of U.S. corn, while Canada leads in purchasing U.S. corn-derived ethanol.

“We’re just hoping we don’t lose the exports,” said Kenny Hartman Jr., president of the National Corn Growers Association.

With February 1 approaching, Trump’s tariff threats continue to raise tensions across key trade partners.