U.S. President Donald Trump has intensified threats of “far larger” tariffs against the European Union and Canada, framing potential collaboration between the two as an existential threat to American economic interests.
The escalation follows Wednesday’s announcement of a 25% tariff on non-U.S.-made vehicles, set to take effect on April 2, which analysts warn could destabilise global automotive supply chains.
“If the European Union works with Canada in order to do economic harm to the USA, large scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!” Trump declared in a Truth Social post.
The threat coincides with plans to launch “reciprocal tariffs” targeting nations contributing to the U.S. trade deficit, dubbed “Liberation Day” by the administration.
The automotive tariffs—applying to cars, light trucks, and components like engines and electrical parts—build on existing levies on steel, aluminium, and goods from Mexico, Canada, and China. White House aide Will Scharf projected the measures could generate over $100 billion annually, though critics argue they risk disrupting U.S. manufacturers reliant on imported parts.
Global markets reacted sharply, with U.S. and Asian automakers’ shares declining post-announcement. European giants faced similar pressures as trading opened, while Germany’s Economy Minister Robert Habeck urged a firm response from the EU, calling the tariffs a “disastrous signal” for global trade.
Canada’s Prime Minister Mark Carney condemned the move as a “direct assault,” pledging to convene a high-level cabinet meeting to coordinate counteractions. “We will protect our workforce, our companies, and our nation, and we will do so united,” he stated.
The EU, meanwhile, has delayed retaliatory measures—including a proposed 50% tariff on U.S. bourbon—until mid-April, though Trump threatened a 200% duty on EU wines if implemented.
The tariffs arrive amid deteriorating U.S.-EU relations, strained by disagreements over Ukraine and security guarantees. Analysts caution the policies could backfire, as U.S. automakers rely on imported parts from Mexico, Canada, and Germany, which are key suppliers of the $474 billion in automotive imports recorded in 2024.