Trump Stirs Tariff Pot With New EU Threats

Trump made his latest tariff threats in remarks to reporters at the White House the day after taking office, without immediately imposing tariffs as he promised during his campaign.

Financial markets and trade groups briefly exhaled on Tuesday, but his latest comments underscored Trump's long-standing desire to expand tariffs and set a new Feb. 1 deadline for 25% tariffs on CANADA and Mexico, as well as duties on CHINA and the EU .

Trump said the EU and other countries also have alarming trade surpluses with the United States.

"The European Union is very, very bad for us," he said, echoing comments he made Monday. "So they will be subject to tariffs. That's the only way... to get justice."

Trump said Monday he was considering tariffs on Canada and Mexico if they do not stop the trafficking of illegal immigrants and fentanyl across their borders with the United States .

White House trade adviser Peter Navarro told CNBC early Tuesday that Trump's threat to impose tariffs on Canada and Mexico was intended to pressure the two countries to stop bringing illegal migrants and illegal drugs into the U.S.

On Monday, Trump signed a broad trade memorandum directing federal agencies to complete comprehensive reviews of a range of trade issues by April 1.

These include analyses of the persistent U.S. trade deficit, unfair trade practices, and currency manipulation among partner countries, including China . Trump’s memo asked for recommendations on remedies, including a “global supplemental tariff” and changes to the $800 de minimis duty-free exemption for low-value shipments often accused of illegally importing fentanyl precursor chemicals.

The ordered reviews provide some breathing room to resolve known disagreements among Trump's Cabinet nominees over how to approach his promises of across-the-board tariffs and 60% duties on Chinese goods.

Trump's more measured approach to tariffs has sparked a rally in U.S. stocks, pushing the benchmark S&P 500 index to its highest level in a month, although Trump's fresh salvo on China and the European Union could offset that momentum.

Trump likely "decided to move a little bit more slowly and also to make sure that he had as strong a legal basis as possible for this kind of action," said William Reinsch, a trade expert at the Center for Strategic and International Studies in Washington. 

Softer tones

Mexico and Canada struck a conciliatory tone in response to Trump's Feb. 1 deadline. Mexican President Claudia Sheinbaum said she would emphasize Mexico's sovereignty and independence and respond to U.S. actions "step by step."

But she added that the US-Mexico-Canada free trade agreement is not up for renegotiation until 2026, a comment aimed at pre-empting speculation that Trump would seek a quick renegotiation of the pact, which underpins more than $1.8 trillion in annual trilateral trade.

Corn farmers are concerned that U.S. tariffs and retaliatory duties will disrupt trade with Mexico, their largest corn EXPORT buyer, and Canada, the largest export buyer of U.S. corn-based ethanol.

“We understand that he’s a negotiating type of guy,” Illinois farmer Kenny Hartman Jr., president of the board of the National Corn Growers Association, said of Trump. “We’re just hoping that we can come out of this without losing exports — we don’t lose corn going to Mexico or ethanol going to Canada.”