World reacts with caution to Trump’s ‘reciprocal’ tariffs against dozens of nations

BANGKOK (AP):

The sweeping new tariffs announced yesterday by United States (US) President Donald Trump were met initially with measured reactions from key trading partners, highlighting the lack of appetite for a full-fledged trade war.

Trump presented the import taxes, which he calls “reciprocal tariffs” in the simplest terms: the US would do to its trading partners what, he said, they had been doing to the US for decades.

The tariffs range from 10 per cent, affecting countries including Jamaica and several other Caribbean nations, to the 49 per cent slapped on Cambodia, a nation which taxes imports from the US at a whopping rate of 97 per cent.

China, which charges 67 per cent for US imports, was hit with a 34 per cent tariff. However the 34 per cent will be in addition to tariffs China already faces, bringing its tariff rate to 54 per cent.

“Taxpayers have been ripped off for more than 50 years,” Trump said. “But it is not going to happen any more.”

The tariffs take effect April 5.

The president promised that “jobs and factories will come roaring back into our country”. He framed it not just as an economic issue, but a question of national security that threatens “our very way of life”.

Financial markets were jolted, with US stock futures down by as much as three per cent early Thursday and Tokyo’s market leading losses in Asia. Oil prices sank more than US$2 a barrel and the price of bitcoin dropped 4.4 per cent.

‘Nobody wants a trade war’

Shortly after Trump’s announcement, the British government said the US remains the United Kingdom’s (UK) “closest ally”.

Business Secretary Jonathan Reynolds said the UK hoped to strike a trade deal to “mitigate the impact” of the 10 per cent tariffs on British goods announced by Trump.

“Nobody wants a trade war and our intention remains to secure a deal,” said Reynolds. “But nothing is off the table and the government will do everything necessary to defend the UK’s national interest.”

Italy’s conservative Premier Giorgia Meloni described the new 20 per cent tariffs against the European Union as “wrong”, saying they benefit neither side.

“We will do everything we can to work towards an agreement with the US, with the aim of avoiding a trade war that would inevitably weaken the West in favour of other global players,” Meloni said in a Facebook post.

Brazil’s government said it was considering taking the case to the World Trade Organization. And later, in a rare display of unity, Brazil’s Congress unanimously passed a reciprocity bill to allow its government to retaliate against any country or trade bloc that imposes tariffs on Brazilian goods.

‘No basis in logic’

Some countries took issue with the White House’s calculations.

Australian Prime Minister Anthony Albanese said the US tariffs imposed on his country were totally unwarranted, but Australia will not retaliate.

The 29 per cent tariff imposed on the tiny South Pacific outpost of Norfolk Island came as a shock. The Australian territory has a population of around 2,000 people and the economy revolves around tourism.

“To my knowledge, we do not export anything to the United States,” Norfolk Island Administrator George Plant, the Australian government’s representative on the island, told the AP on Thursday. “We don’t charge tariffs on anything. I can’t think of any non-tariff barriers that would be in place either, so we’re scratching our heads here.”

New Zealand also took issue with Trump’s tariff logic.

“We don’t have a 20% tariff rate,” said Trade Minister Todd McClay, adding that New Zealand was “a very low-tariff regime” and the correct figure was below the 10% baseline rate applied by the US to all countries.

“We won’t be looking to retaliate. That would put up prices on New Zealand consumers and it would be inflationary,” he said.

Spared for the moment from the latest round of tariffs were Mexico and Canada, so far as goods that already qualified under their free-trade agreement with the United States. Yet, the previously announced 25 per cent tariffs on auto imports were scheduled to take effect at midnight.

Mexico President Claudia Sheinbaum said on Wednesday she would wait to take action on Thursday when it was clear how Trump’s announcement would affect Mexico.

“It’s not a question of ‘if you impose tariffs on me, I’m going to impose tariffs on you’,” she said on Wednesday morning. “Our interest is in strengthening the Mexican economy.”

Canada had imposed retaliatory tariffs in response to the 25 per cent tariffs that Trump tied to the trafficking of fentanyl. The European Union, in response to the steel and aluminium tariffs, imposed taxes on 26 billion euros’ worth (US$28 billion) of US goods, including bourbon, prompting Trump to threaten a 200 per cent tariff on European alcohol.

Little to gain

As Trump read the list of countries that would be targeted on Wednesday, he repeatedly said he didn’t blame them for the trade barriers they imposed to protect their own nations’ businesses. “But we’re doing the same thing right now,” he said.

“In the face of unrelenting economic warfare, the United States can no longer continue with a policy of unilateral economic surrender,” Trump said.

Speaking from a business forum in India, Chilean President Gabriel Boric warned that such measures, in addition to causing uncertainty, challenge the “mutually agreed rules” and the “principles that govern international trade”.

Colombia President Gustavo Petro, who has clashed with Trump before, said via X that the tariffs marked a global milestone: “Today the neoliberalism that proclaimed free-trade policies all over the world has died.”

Analysts say there’s little to be gained from an all-out trade war, neither in the United States nor in other countries.

“Once again, Trump has put Europe at a crossroads,” said Matteo Villa, senior analyst at Italy’s Institute for International Political Studies.

“If Trump really imposes high tariffs, Europe will have to respond, but the paradox is that the EU would be better off doing nothing,” he added.

Villa also noted that retaliation would certainly be a further “blow” to the United States, but it would hurt Europe even more, as the EU bloc depends more on exports to the US than vice versa.

“On the other hand, Trump seems to understand only the language of force, and this indicates the need for a strong and immediate response,” Villa said. “Probably the hope, in Brussels, is that the response will be strong enough to induce Trump to negotiate and, soon, to backtrack.”