News / EU pledges 'proportionate' response to new Trump tariffs

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Supply chains are bracing for the impact of US trade tariffs, which could be introduced as early as next week. 

While on inauguration day, president Trump pushed back on plans to introduce tariffs immediately, yesterday he singled out the EU, which he claimed “is very, very bad to us”. 

He added: “So they’re going to be in for tariffs. It’s the only way … you’re going to get fairness.” 

This morning, the EU commissioner for the economy told CNBC that the bloc would respond “proportionately”. 

“If there is a need to defend our economic interests, we will be responding in a proportionate way,” Valdis Dombrovskis said on the sidelines of the World Economic Forum in Davos, Switzerland. 

“We’re ready to defend our values and also our interests and rights, if that becomes necessary,” he added, saying officials were looking for a “pragmatic solution”. 

“It’s important to maintain this trade and investment relationship, because global economic fragmentation would set in and there is a real risk of this happening, and the IMF estimates that would mean a reduction of the world GDP by up to 7%,” explained Mr Dombrovskis. 

The balance of trade with the EU has irked Mr Trump. In 2023, the EU exported more than €502bn ($523bn) of goods to the US, and imported €340bn.  

One thing the EU has not been accused of is shipping fentanyl-related products to the US, an act likely to trigger tariffs on Mexico, Canada and China of as high as 25% on the former pair, introduced as early as Saturday, while China could face 10% on top of its current tariffs. 

“We always believe that there is no winner in a trade war or tariff war,” said a Chinese trade ministry spokesperson today, but added: “China will always firmly safeguard its national interests.” 

The impact on logistics will be noticeable, said Brandon Fried, head of the US Airforwarders Association, speaking to The Loadstar in November. 

“If these tariffs take hold, the reality is it’s going to have an adverse impact on cargo flows. There won’t be as much cargo coming into the United States.” 

And he warned that it could also lead to poor practices by US companies. “I think the reality is that one of the things tariffs do is to shield bad behaviour; you are protected by a tariff, so you don’t have to compete with another country. And that’s unfortunate. That’s not the way we are here.” 

Meanwhile, at this week’s other billionaire shindig in Davos, Economist Impact and DP World unveiled data showing that 75% of businesses are overhauling their supply chains due to uncertainty caused by the ‘America First’ policy. And about 40% are increasing their US-based sourcing. 

The Trade in Transition study of some 3,500 supply chain executives across the world shows firms are being “forced to adapt at speed to rising protectionism and shifting geopolitical alliances”.

It adds that 71% of executives think countries such as Vietnam, Mexico, India, the UAE, and Brazil could help mitigate trade risks.