Europe’s top trade official will speak with U.S. counterparts on Friday, as countries around the world figured out how to respond to President Donald Trump’s tariff hammer blow that has fed fears of recession and triggered a global stock rout.
Nations from Canada to China have readied retaliation in an escalating trade war after Trump raised tariff barriers to their highest level in more than a century this week, leading to a plunge in world financial markets.
In Japan, one of United States’ top trading partners, Prime Minister Shigeru Ishiba said that the tariffs had created a “national crisis” as a plunge in banking shares on Friday set Tokyo’s stock market on course for its worst week in years.
Investment bank JP Morgan said it now sees a 60% chance of the global economy entering recession by year end, up from 40% previously.
With European shares also heading for the biggest weekly loss in three years, the European Union’s trade commissioner Maros Sefcovic will speak to U.S. counterparts.
“The EU will respond in a calm, carefully phased, and above all, unified way, as we calibrate our response,” he said on social media. “We will not shoot from the hip – we want to give negotiations every chance to succeed to find a fair deal, to the benefit of both sides.” He added.
The EU is divided on how best to respond to Trump’s tariffs, including on use of its ‘Anti-Coercion Instrument’, which allows the bloc to retaliate against third countries that put economic pressure on EU members to change their policies.
Countries that are cautious about retaliating and thereby raising the stakes in the standoff with the U.S. include Ireland, Italy, Poland and the Scandinavian nations.
The European Commission is nevertheless trying to finalise a list of U.S. imports worth up to 26 billion euros ($28 billion) on which to place retaliatory tariffs in response to U.S. tariffs on steel and aluminium.
The Commission, which coordinates trade policy for the EU’s 27 members, has still to work out how best to respond to the sweeping tariffs announced by Trump this week and an earlier announcement on car tariffs.
French President Emmanuel Macron led the charge by calling on companies to freeze investment in the U.S.
“Investments to come or investments announced in recent weeks should be suspended until things are clarified with the United States,” Macron said during a meeting with French industry representatives.
However, French Finance Minister Eric Lombard later cautioned against like-for-like countermeasures on the U.S. tariffs, warning this would also rebound on European consumers.
Reuters/Olusola Akintonde
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