Donald Trump threatens to impose 25% tariffs on EU goods

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Donald Trump has threatened to slap 25 per cent tariffs on imports from the EU, as he lashed out at the bloc, saying it “was formed to screw the United States”.

The remarks came during the first cabinet meeting of Trump’s second term on Wednesday, which featured an appearance by Elon Musk, the billionaire whom the US president has charged with slashing government spending.

“We have made a decision and we’ll be announcing it very soon,” Trump said when questioned about his plans for EU tariffs. “It’ll be 25 per cent generally speaking, and that will be on cars and all other things.”

Trump’s comments raise the prospect of a broad transatlantic trade war that could hurt both the US and European economies and inflict greater damage on frayed diplomatic ties among the western allies.

Trump is separately preparing to implement 25 per cent tariffs on America’s neighbours Canada and Mexico as the White House tries to rein in what it said was undocumented immigration and fentanyl trafficking.

Despite Trump’s promises to impose tariffs on those two countries as well as China from day one of his presidency, only measures against Beijing have taken effect.

During his first term, the US president also threatened several tariffs that failed to materialise.

On Wednesday, the Trump said that the levies on Canada and Mexico would take effect on April 2, suggesting a possible delay in the tariffs, which were slated to be imposed next week.

But as Trump spoke, Howard Lutnick, the commerce secretary, intervened to note that America’s neighbours still had to satisfy the president’s demands on fentanyl, suggesting they might still take effect next week.

“It’s going to be hard to satisfy,” Trump said after Lutnick jumped into the discussion.

Trump’s broadside against the EU comes just two days after he hosted Emmanuel Macron, the French president, at the White House, for a meeting that included a discussion about trade in addition to the peace talks in Ukraine.

Sir Keir Starmer, prime minister of the UK, which has left the EU, will meet Trump in Washington on Thursday.

The president did not offer any new details of his proposed tariffs on the EU, including what authority he would use, but renewed his fierce attacks on the bloc for what he has long perceived as an unbalanced economic relationship.

“They’ve really taken advantage of us in a different way. They don’t accept our cars. They don’t accept essentially our farm products, they use all sorts of reasons why not,” he said.

“Let’s be honest, the European Union was formed in order to screw the United States. That’s the purpose of it. And they’ve done a good job of it.”

The formation of the bloc was encouraged by Washington in the aftermath of the second world war to deepen economic integration and make conflict less likely.

The euro fell slightly following Trump’s comments, trading 0.2 per cent lower against the dollar at $1.049.

Auto groups, which would be heavily affected by the proposed tariffs on US imports from both Canada and Mexico as well as the EU, have warned that vehicle demand would be hurt as consumers are forced to pay higher prices if a 25 per cent tariff on imported cars is imposed. 

“Consumers will not be able to absorb the increase in vehicle prices and volumes will decline,” said a chief executive of a major European auto parts supplier. “The industry is already in a fragile position and this massive uncertainty is already slowing down deals, investments and allocation of capital.” 

During Wednesday’s cabinet meeting, Elon Musk defended his efforts to cut federal government spending, saying that “America will go bankrupt” without his team’s interventions.