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European tariffs: “the writing is on the wall”
Although no tariffs have been directed at Europe so far, the “writing is on the wall”, according to Michael Field, chief market strategist at Morningstar. “That Donald Trump has no qualms about imposing them on his nearest neighbours, means that Europe too should be bracing for impact,” he added.
Trump recently told the BBC that the European Union has “taken advantage” of the US and is “way out of line” for not importing more US goods. In 2023 (the most recent year we have annual figures for), the US-EU trade deficit was $208.2 billion.
“They don’t take our cars, they don’t take our farm products, they take almost nothing. And we take everything from them,” Trump said.
Markets tumble as trade war heats up
Stock markets tumbled in Asia on Monday in response to the latest news from Washington. In Taiwan, the Taiex index shed 3.53%. In Japan, the Nikkei 225 closed 2.66% lower. Meanwhile, in South Korea, the Kospi fell 2.52%.
European markets have also tumbled so far this morning, as investors process the fact that the EU could be next on Trump’s hit list. The Stroxx Europe 600 is down more than 1% at the time of writing.
Meanwhile in the UK, the FTSE 100 is down more than 1% so far. Trump has indicated that a deal could be “worked out” with the UK to exclude it from tariffs, but even if this is the case, a global trade war would spell bad news for domestic markets and the economy.
This is not a drill
On 1 February, US president Donald Trump announced 25% tariffs on Canada and Mexico and a 10% tariff on China, due to kick in from 4 February. The trade wars have begun.
Trump made extensive tariff threats while on the campaign trail in the lead-up to the US election but, until recently, experts had been warming up to the idea that these were little more than a bargaining chip. The latest moves suggest otherwise.
Here’s everything you need to know – from what’s been announced to how markets have responded.
