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US President Donald Trump ramped up his tariff threats to the European Union while saying he would speak with the leaders of Canada and Mexico, as stock markets sank following a hectic weekend that saw prospects for a trade war turn into reality.
In remarks to reporters on Sunday night, Trump said he would hold separate calls on Monday morning with Canadian Prime Minister Justin Trudeau, as well as with the Mexican leadership, after announcing 25% tariffs on the US’s neighbors and top trading partners. The levies are set to take effect Feb. 4, barring a last-minute deal.
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“I don’t expect anything very dramatic,” Trump said of the planned calls. “We put tariffs on. They owe us a lot of money, and I’m sure they’re going to pay.”
Trump also reiterated a warning to the European Union that tariffs “will definitely happen,” citing a large trade deficit with the bloc.
“They don’t take our cars, they don’t take our farm products,” Trump said of the EU. “They take almost nothing, and we take everything, and then millions of cars, tremendous amounts of food and farm products.”
Trump’s comments leave little room for optimism of an agreement to avoid a North American trade war that may spread across the world. US stock futures and Asian shares declined, the peso fell to its lowest level against the dollar in almost three years and the Canadian dollar sank to its weakest since 2003. The euro dropped on Trump’s renewed threats while the dollar rose.
Both Canada and Mexico have pledged to retaliate if Trump follows through on his threats. Mexican President Claudia Sheinbaum said she’ll detail her plans early Monday, while Trudeau has pledged 25% retaliatory tariffs on $106 billion worth of US goods. China, which is also due to be hit with a 10% levy, has vowed “corresponding countermeasures” though hasn’t detailed them yet. The nation is currently near the tail end of a weeklong holiday for Lunar New Year.
Trump has said he may escalate US tariffs further in response to any retaliations.
“They have to balance out their trade, number one,” Trump said when asked what the countries need to do to have the tariffs lifted. “They’ve got to stop people from pouring into our country. They have to stop people from pouring in and we have to stop fentanyl, and that includes China.”
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