Donald Trump has threatened to target the EU next after announcing punishing import tariffs on Canada, Mexico and China, while warning that the UK is “out of line” but could still reach a deal. On Monday Trump announced a one-month “pause” in the threatened tariffs after conversations with his Mexican counterpart, Claudia Sheinbaum, and the Canadian prime minister, Justin Trudeau. But much uncertainty remains.
Here are five charts outlining what is at stake for the EU and the UK.
The US is the largest goods importer in the world – buying products worth $3tn (£2.4tn) in 2023. It also has the largest trade in goods deficit – when imports exceed exports – worth $1tn.
Trump has long complained about the deficit as a sign of “unfair” trade practices being used by the US’s trading partners, and sees it as a sign of weakness in the US economy after decades of factory production shifting overseas.
The US’s largest trade in goods deficit with a single country is with China, worth $279bn in 2023. This was followed by the EU, at $208bn. However, taking account of services trade significantly reduces the deficit with the EU, because of large volumes of transatlantic trade in financial services, intellectual property and other professional sectors.
The UK has a more balanced relationship with the US. The US is Britain’s largest single export market, worth £60.4bn in goods in 2023, accounting for 15.3% of the global total. The UK imported £57.9bn in goods from the US.
Services trade is significantly larger, worth £126.3bn in exports from the UK to the US and £57.4bn in imports.
In a quirk caused by differences in data collection, the US and the UK report trade surpluses with one another. The UK reported a £71.4bn surplus with the US in 2023, while the US reported one worth £11.6bn with the UK.
Should Trump impose tariffs on the EU, some countries are likely to be hit harder than others. Germany has by far the most goods exports, worth €158bn (£131bn) in 2023. The Netherlands imports the most goods from the US, worth €76bn.
However, the proportion of exports to the US relative to total trade also varies significantly between EU member states. Ireland has by far the largest share, at more than 25%. Germany and Italy’s trade with the US is worth about 10% of their global totals, while east European nations have lower shares.
On trade, the EU takes collective action. Emmanuel Macron has said the bloc will stand up for itself if it is targeted. The UK now negotiates alone after Brexit. Keir Starmer has sought to build ties with both camps, and Trump has signalled a deal can be “worked out” with the UK.
Some economists are optimistic about the UK’s prospects as a result, but others warn Starmer will be faced with unmeetable trade-offs.
Should blanket tariffs on EU and UK goods be imposed by the US, the most heavily exposed sectors would include the region’s car manufacturers, chemicals firms and pharmaceutical companies.
Machinery and transport equipment is the largest sector for goods exports, worth more than £200bn combined between the UK and the EU in 2023, led by Germany, the region’s dominant manufacturing force. With substantial operations in Mexico, Germany’s car manufacturers are already facing a substantial hit.
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In the trade battles during Trump’s last term in office, the US targeted famous consumer goods including French wines and cheeses, Italian luxury goods and Scottish and Irish whiskies, while the EU retaliated by targeting symbols of Americana – including Kentucky whiskey, Levi’s jeans and Harley-Davidson motorcycles.
Economists warn that Trump’s tariffs could stoke US inflation and hit economic growth, with American consumers left picking up the tab through the higher price of imported goods.
The US dollar rose on Monday as investors bet the US Federal Reserve would be forced to keep interest rates higher for longer. Should Trump expand his trade war to involve more countries, and should they retaliate, there could be wider global inflationary consequences, and a hit to global growth.
The National Institute of Economic and Social Research, a UK thinktank, estimates a 10% tariff on all US imports – with retaliation from trading partners – could reduce global growth by about 1% over the next two years. UK growth could also be dragged down by up to 0.7 percentage points in the first year, while inflation would be 3 to 4 points higher, and interest rates would be 2 to 3 points higher.
However, tariffs could be disinflationary depending on how the trade war unfolds. Weaker global growth could cool inflationary pressures, while economists have said huge US tariffs on China alone could lead to lower prices in other countries because Chinese companies could respond by trying to find alternative buyers.
Borrowing costs for governments have risen sharply in recent months amid investor fears over Trump’s tariffs stoking inflation. The rise in the yield – in effect the interest rate – on government bonds has caused a headache for several nations with high levels of debt, including the UK and France.
From a low of about 3.9% in September, the yield on US 30-year Treasury bonds has risen to above 4.7%. In the UK, borrowing costs have risen over that time from 4.3% to 5.1%.
For the UK government, that presents the chancellor, Rachel Reeves, with a dilemma before her spring statement on 26 March. Analysts warn that sustained higher borrowing costs could break her fiscal rules.
After Trump’s weekend announcement, bond yields fell as investors rushed to sell riskier shares in favour of safer assets. However, analysts said a tough trade-off is emerging: yields could be pushed higher by central banks holding interest rates at higher levels, but may be dragged lower if tariffs hit economic growth, forcing central banks to cut borrowing costs.
The leader of Ontario – Canada’s most populous province – has said that American companies will be banned from provincial government contracts until the US ends the tariffs President Donald Trump imposed on Canada.
Ontario Premier Doug Ford also emphasised that his government would be “ripping up” its C$100m ($68m; £55.1) contract with Elon Musk’s satellite internet company Starlink.
“Ontario won’t do business with people hell-bent on destroying our economy,” said Ford, who is running in the province snap election he called last week.
Trump and Canadian Prime Minister Justin Trudeau spoke on Monday about the 25% import tax on Canadian goods that the US president announced at the weekend.
Trump said in the Oval Office on Monday they had a “good talk” but that he raised a number of issues he saw as trade irritants.
“I’m sure you’re shocked to hear that, but Canada is very tough,” he said.
“They’re very, very tough to do business with, and we can’t let them take advantage of the US.”
The president has given a number of reasons in recent months for threatening tariffs on Canada, from border security to trade deficits and the country’s failure to meet Nato defence spending targets.
The pair are schedule to speak again this afternoon.
The president announced on Saturday that a 25% import tax on goods from Canada and Mexico would begin on Tuesday, along with 10% tariffs on goods from China.
Canadian energy faces a lower 10% tariff.
Trudeau immediately announced counter-tariff plans in response. He said that his government would place C$30bn in tariffs on American goods this week – with an additional C$125bn in 21 days, for a total of C$155bn ($107bn; £86bn) – if the US moves ahead with the levies.
Canada has “no choice but to hit back, and hit back hard”, Ford said at a news conference on Monday.
“Canada didn’t start this fight with the US, but you better believe we’re ready to win it,” the Ontario premier added.
Ford has targeted Starlink in that effort after his Ontario government partnered with the internet firm. The province launched a programme with Starlink last November that would offer high-speed satellite internet access to 15,000 eligible unserved and underserved homes and businesses.
Musk, the CEO of SpaceX – Starlink’s parent company – is one of Trump’s closest allies.
In a post on X, he responded with: “Oh well.”
Ford said he believes the province has “a very good case” should Starlink attempt to challenge the move in court, but he is willing for the province to pay a penalty.
“It’s the principle,” he said.
Other Canadian provinces are taking a similar path.
Officials in Quebec, British Columbia and New Brunswick announced plans to target American booze, removing it from shelves in provincial liquor stores, and said they will revisit provincial contracts for US firms.
On Monday, Mexican President Claudia Sheinbaum and Trump announced that they had agreed on a one-month delay on tariffs on imports from her country after she promised to send additional Mexican National Guard troops to the border.
A Canadian official told the New York Times that Ottawa is not optimistic it will get a similar reprieve.
The president said tariffs are needed to “protect” Americans from the “major threat of illegal aliens and deadly drugs”, including fentanyl.
His administration alleges that Mexican gangs have fentanyl labs in Canada. Trudeau has said less than 1% of fentanyl entering the US comes from his country.
In December, Canada said it would devote C$1.3bn ($900m; £700m) to a new border plan that included strengthened surveillance.
From the Boston Globe:
Sen. Elizabeth Warren, D-Mass., sent a letter Monday to Treasury Secretary Scott Bessent demanding answers for why the so-called Department of Government Efficiency was granted access to the federal payments system, giving Elon Musk and his team a powerful tool that could be used to track and potentially limit government spending.
The letter is a sign of mounting outrage among Democrats over the unorthodox efforts that the Trump administration and Musk are preparing to take control of how congressionally approved funds are spent. The questions come after a career civil servant named David Lebryk abruptly resigned Friday after requests to grant Musk’s lieutenants access to Treasury’s payment system.
“It is extraordinarily dangerous to meddle with the critical systems that process trillions of dollars of transactions each year, are essential to preventing a default on federal debt, and ensure that tens of millions of Americans receive their Social Security checks, tax refunds and Medicare benefits,” wrote Warren, the top Democrat on the Senate Banking Committee.
FINALLY, someone is speaking out. I’m glad it’s someone with some clout like Warren, but Jesus God, where is Chuck Schumer?????
Not long after “Hockey Night in Canada” began on the big screens of a bar in Windsor, Ontario, fans in the arena could be heard delivering an icy message as the visiting team’s national anthem was played. They booed, long and loud.
The visiting team was the Minnesota Wild, the anthem was “The Star-Spangled Banner,” and the game in Ottawa on Saturday was taking place hours after President Trump imposed heavy trade tariffs on Canadian imports.
Windsor is the automotive capital of Canada, and a city where the flag lauded in the booed American anthem can often be seen flapping beside its Canadian counterpart. With Detroit just across the border, A.T.M.s in Windsor disburse both U.S. and Canadian dollars.
And so Mr. Trump’s decision to impose damaging 25 percent tariffs on most Canadian exports and 10 percent levies on energy exports has set off waves of anger and worry in Windsor, and a sense, for many people, of deep disappointment and helplessness.
The tariffs, a stunning departure from the norm in modern relations between the two countries, has raised concerns about a swift shutdown of local auto plants, as well as car factories in Detroit across a river that at some points is only a half-mile wide.
Mr. Trump’s suggestions, repeated again on Sunday, that Canada abandon its sovereignty and throw in its lot with the United States merely added insult to injury. Canadians in Windsor viewed the American president’s idea as — to put it mildly — profoundly unneighborly.
“What is he going to do to us?” wondered Navita Peters, a clerk at a convenience store, as she price-scanned a newspaper with a large photo of a Canadian maple leaf flag on the front page. “It’s unfortunate for the businessmen, but we’re all going to eventually suffer.”
Ms. Peters, who moved to Windsor 25 years ago from Trinidad, said: “It is upsetting, but what can we do? I am proud to be Canadian.”
Lana Payne, the president of Unifor, a union that represents many of Windsor’s autoworkers and employees in other industries across the country, said that since Mr. Trump’s tariffs were announced late Saturday afternoon, she had been deluged by messages.
“A lot of Canadians are waking up this morning absolutely enraged and trying to figure out why their closest ally in the world would do this to them,” said Ms. Payne, who estimated that about 120,000 of her union’s members work in jobs that depend on exports, primarily to the United States. “I never thought I would see this in my lifetime.”
Windsor had appeared to be on the upswing.
After many years of new auto investment going to other places in Canada or, more commonly, Mexico and the southern United States, Stellantis spent 1.89 billion Canadian dollars (about $1.3 billion) to retool a Chrysler assembly plant in Windsor to make electric vehicles alongside gasoline-powered ones. With 4,500 employees, and thousands more expected once a third shift is added, the factory is the hub of the auto industry in Windsor.
And out on the city’s eastern fringes, a 5 billion Canadian dollar (about $3.4 billion) battery plant owned by Stellantis and LG is under construction, with one part already in operation.
Now, instead of anticipating growth, local companies are anxiously waiting to see if they can hold onto what they already have.
Flavio Volpe, the president of the Automotive Parts Manufacturers’ Association, a Canadian trade group, said that Windsor’s many auto parts makers receive weekly orders from automakers based on the production schedules of assembly plants in both Canada and the United States. Now, he said, auto companies are likely to tell parts makers with U.S. orders “that they need to eat the 25 percent.”
Since absorbing the tariff would mean losses of 15 percent to 20 percent for most parts companies, most will probably decide to stop shipping, Mr. Volpe said. Carmakers, too, would have to dramatically hike prices to consumers to offset tariffs on finished cars shipped from Canada.
“How are you going to book a loss every day?” Mr. Volpe asked.
George Papp, the chief executive of Papp Plastics, a parts maker headquartered near the Detroit River in Windsor, said on Sunday that he had yet to hear from any auto companies.
“It is becoming obvious that this is less about punishing Canada or Mexico and more about restructuring revenue for the United States,” Mr. Papp said. Other nations may soon also find themselves hit by American tariffs. “Canada and Mexico are the world’s examples of what’s to come,” he said.
Because auto plants often keep in stock as little as 24 hours’ worth of parts, assembly line shutdowns are expected to quickly follow any suspension of parts shipments. The Stellantis plant in Windsor, which makes minivans and muscle cars, is among those facilities at risk, since it relies on components sent from the United States that use Canadian parts.
Even before Mr. Trump made the tariff order official, and the Canadian government responded with tariffs of its own on American products, some people in Windsor were discussing boycotts.
At a cafe adjacent to the distillery where Canadian Club whisky is made — and largely exported to the United States — two men could be heard loudly discussing their options. They ruled out taking any vacations in the United States, and even vowed not to cross the river for Detroit Tigers games once baseball season begins.
Under official orders, American beer, wine and sprits are to be pulled from the shelves of government-owned liquor stores. One supermarket was running paid posts touting the Canadian origins of some brands of pasta and frozen French fries. And online advertisements by Canadian airlines for trips to sunnier U.S. winter destinations have been met with derisive comments and calls to vacation in Canada.
While economic concerns predominate, Windsor residents also worry about the harm the dispute poses to the close relationship they have long enjoyed with the United States.
“Detroit’s our backyard,” Drew Dilkens, Windsor’s mayor, said, sitting in a meeting room with a view of the American city’s skyline.
Mr. Dilkens said Canada did have “cards we can play” in retaliation, but that the prospect gave him no pleasure.
“We want to be friends, like we have been for hundreds of years,” he said. “We’re not looking for a battle.”
BRUSSELS (AP) — After three years spent trying to deter Russia from destroying Ukraine, European Union leaders grappled on Monday with possible responses to a major ally who appears determined to start a trade war or perhaps even seize part of their territory.
Polish Prime Minister Donald Tusk said that it would “be a cruel paradox, if during the time of this direct Russian threat and Chinese expansion ” that the EU and the United States might end up in a “conflict among allies.”
Since taking office in the White House last month, U.S. President Donald Trump has threatened to impose tariffs on EU imports and refused to rule out the use of military force to take control of Greenland, an autonomous territory of NATO ally Denmark.
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Trump has also mystified the Europeans by showing little sign of how he intends to end the war in Ukraine within six months as promised, let alone in a day, as he boasted during the election campaign last year.
Tusk, whose country currently holds the EU’s rotating presidency, said that Trump’s threats amount to “a serious test” of European unity, and “in a very strange context, because it’s the first time where we have such a problem among allies.”
“We have to do everything to avoid this totally unnecessary and stupid tariff war or trade war,” Tusk told reporters in Brussels, where EU leaders were meeting for talks on boosting and improving military spending, and ramping up Europe’s defense industry.
French President Emmanuel Macron said that the EU is “a power that stands its ground” and that if hit with tariffs, the bloc “would have to make itself respected.” He said that Trump’s threats are “pushing Europeans to be more united, more active in addressing their collective security challenges.”
Trump slapped tariffs on European steel and aluminum during his first term, and EU leaders have already been in contact with Canadian Prime Minister Justin Trudeau since Canada imposed retaliatory duties on U.S. goods in response to a 25% tariff levied by Trump.
“We were listening carefully to (Trump’s) words, and of course we are preparing also on our side,” EU foreign policy chief Kaja Kallas said. But, she underlined, “there are no winners in trade wars. If … the U.S. starts a trade war, then the one laughing on the side is China.”
Meanwhile, Denmark’s prime minister insisted on Monday that Greenland isn’t for sale and called for a robust response from the EU should U.S. Trump press ahead with his threat to take control of the island.
“I will never support the idea of fighting allies. But of course, if the U.S. puts tough terms on Europe, we need a collective and robust response,” Danish Prime Minister Mette Frederiksen told reporters.
Last month, Trump left open the possibility that the American military might be used to secure Greenland, as well as the Panama Canal. “We need Greenland for national security purposes,” he said.
Frederiksen said that she has “great support” from her EU partners on the fact “that everybody has to respect the sovereignty of all national states in the world, and that Greenland is today a part of the Kingdom of Denmark. It’s part of our territory and it’s not for sale.”
She acknowledged U.S. concerns about security in the Arctic Region, where Russia and China have been increasingly active.
“I totally agree with the Americans that the High North, that the Arctic region is becoming more and more important when we are talking about defense and security and deterrence,” Frederiksen said, adding that the U.S. and Denmark could have “stronger footprints” in Greenland, in security terms.
“They are already there and they can have more possibilities,” she said, underlining that Denmark itself can also “scale up” its security presence. “If this is about securing our part of the world, we can find a way forward,” Frederiksen said.
Last week, her government announced a roughly 14.6 billion kroner (nearly $2 billion) agreement with parties including the governments of Greenland and the Faeroe Islands to “improve capabilities for surveillance and maintaining sovereignty in the region.”
It would include three new Arctic naval vessels, two additional long-range surveillance drones and satellite capacity, the Danish Defense Ministry said.
NATO Secretary-General Mark Rutte said that “it’s absolutely clear that Trump is right, and when it comes to the High North that we have to do more to collectively.”
TORONTO (AP) — The leader of Canada’s most populous province of Ontario said Monday he’s ripping up a contract with Elon Musk’s Starlink internet services in response to U.S. President Donald Trump’s sweeping tariffs on Canada.
Ontario Premier Doug Ford, who said he is also banning American companies from provincial contracts, signed a $100-million Canadian (US$68 million) with Musk’s company in November to deliver high-speed internet to remote residents in rural and northern Ontario.
“We’ll be ripping up the province’s contract with Starlink. Ontario won’t do business with people hellbent on destroying our economy,” Ford said.
“President Trump is the only person to be blamed. Maybe Elon Musk can call his buddy? This is one of the ramifications.”
Ford said U.S.-based businesses will lose out on “tens of billions of dollars” in new revenues as a result of Ontario’s response.
“We just aren’t going to be using American companies,” Ford said. “And no matter if we are building a hospital, if we’re building anything, if we’re building a dog house I want to make sure we are using Ontario steel, Canadian products, Canadian wood, Ontario wood, anything.
“I don’t care if it’s a toothpick. We need to purchase from Canada and Ontario.”
Ontario and other provinces already planned to remove American liquor brands from government store shelves. The Liquor Control Board of Ontario sells nearly $1 billion worth of American wine, beer, spirits and seltzers every year, Ford pointed.
“Canada didn’t start this fight with the U.S., but you better believe we’re ready to win it,” said Ford, who called an election for his province last week.
Ford said he wants a four year mandate that outlasts Trump’s term. “He wants to come after us?” he asked. “I’ve yet to hear one American citizen say Canada is the problem.”
Canada and Mexico ordered retaliatory tariffs on American goods in response to sweeping tariffs imposed by Trump. Ford also encouraged businesses to put the Canadian flag on products so Canadians know what to buy.
“This is a tax on American citizens. That’s what Donald Trump is doing to his own people,” said Ford, who described Musk as part of the Trump team “that wants to destroy families incomes, destroy businesses. He want to take food off the table of hard working people and I’m not going to tolerate it.”
Trump responded Sunday, criticizing Canada’s trade surplus with the United States and contending that without that surplus, “Canada ceases to exist as a viable Country. Harsh but true! Therefore, Canada should become our Cherished 51st State. Much lower taxes, and far better military protection for the people of Canada — AND NO TARIFFS!”
The recent tariffs imposed by President Donald Trump on Canadian imports have sparked widespread outrage and dismay among Canadians. The move, which includes a 25% tariff on all Canadian imports into the US, with a lower 10% levy on energy, has been met with vocal displeasure from usually respectful fans, as seen during recent National Hockey League and National Basketball Association games.
Hockey fans booed the US national anthem during a game in Ottawa, during a hockey game against the US. The incident has now gone viral where Ottawa-based singer Mandia is seen performing “Star-Spangled Banner” during the game. However, Mandia kept performing despite the protest. After this, she also sang “O Canada” which fans supported.
The US anthem gets booed at the Raptors game. Never seen this before. pic.twitter.com/HDipiMs9fW
— William Lou (@william_lou) February 2, 2025
Loud booing at the end of the Star Spangled Banner as well #Sens pic.twitter.com/r8XLKIqkjC
— Bruce Garrioch (@SunGarrioch) February 2, 2025
This also comes amid Trump’s fresh push for Canada to become the 51st American state, but this time it’s no longer a joke.
The tariffs, set to take effect on Tuesday, have also led to a desire to mount a fightback among Canadians, with many calling for solidarity and boycotts of American-made products. One grocery store in Toronto has even labelled its Canadian yogurt for shoppers, per an image posted by Toronto doctor Iris Gorfinkel on X. Canadian author Seth Klein wrote on Bluesky, “Yesterday, in response to Trump tariffs, we cancelled our family March break to the US. Took a small hit on cancelled train tickets, but it needed to be done.”
Prime Minister Justin Trudeau has urged Canadians to stand together, saying “Many among us will be affected by this, and we will have some hard times. I ask you to be there for each other. Now is the time to choose Canada.”
In response to the tariffs, Canada has announced a C$155 billion tariff package on American goods, including vegetables, clothing, sports equipment, and perfume. Goods from Republican-led states are specifically being targeted, such as Florida orange juice.
“We’re certainly not looking to escalate. But we will stand up for Canada, for Canadians, for Canadian jobs,” said Trudeau.
The trade war between the two nations is expected to have significant consequences, including job losses, higher costs for food and gasoline, and potential shutdowns of auto assembly plants. Trudeau has warned that the trade war will not only affect Canada but also have “real consequences” for the American people.
The tariffs have also been met with criticism from Canadian politicians, with Pierre Poilievre, leader of Canada’s opposition Conservative Party, calling them “massive, unjust and unjustified”. He said, “Canada is the United States’ closest neighbour, greatest ally and best friend. There is no justification whatsoever for this treatment.”
Michael Ignatieff, the former leader of Canada’s Liberal Party, has also expressed shock and concern, stating that the tariffs have created a “new world” in which the question of whether America can be trusted has become a fundamental question in foreign policy.
Progressive Conservative Leader Doug Ford is “ripping up” Ontario’s nearly $100 million contract with Elon Musk’s Starlink in the wake of U.S. tariffs on virtually all Canadian goods, he said in a statement Monday.
The contract, signed in November, was meant to provide high-speed internet access through Starlink’s satellite service to 15,000 eligible homes and businesses in rural, remote and northern communities by June of this year.
“Ontario won’t do business with people hellbent on destroying our economy,” Ford said in the statement.
Ford said Ontario will ban American companies from provincial contracts until U.S. tariffs are removed.
“U.S.-based businesses will now lose out on tens of billions of dollars in new revenues. They only have President Trump to blame,” he said.
On Saturday, U.S. President Donald Trump imposed 25 per cent tariffs on virtually all goods from Canada and a lower 10 per cent tariff on Canadian energy products
Musk, an adviser to Trump, is overseeing the U.S. Department of Government Efficiency (DOGE) in co-operation with the president’s administration.
Premier Doug Ford is pulling American booze from the shelves at LCBO stores as of Tuesday in response to U.S. tariffs. But as CBC’s Britnei Bilhete explains, some say the move is an overreaction.
Ford has faced criticism for the contract, with Ontario Liberal Leader Bonnie Crombie calling on him to end the deal last week.
“If he were serious about standing up to Trump, he would cancel his sweetheart deal with Elon Musk,” Crombie previously said in a news release.
Ford defended the contract at the time, saying there was a transparent bidding process and it was part of the government’s plan to get everyone in the province high-speed internet.
According to a news release from Infrastructure Ontario in January 2024, only two satellite internet service providers could meet the province’s needs.
Those were Musk’s SpaceX, which runs Starlink, and Xplore Inc., a rural internet service provider founded in Canada. Both providers were invited to participate in a bidding process, the release said, with SpaceX ultimately winning out.
Starlink surpassed Xplornet, operated by Xplore Inc., as the leading satellite-based provider of rural and remote internet access service in Canada in 2022, according to a report by the Global Media and Internet Concentration Project in December.
As of 2024, Starlink has around 400,000 subscribers in Canada, the report said.