Trump vows harsher tariffs if Canada and EU unite against US

Trump threatened to slam Canada and the European Union with even bigger tariffs on Thursday if they work together against the United States on trade. He made the threat on Truth Social, saying both countries would face “far larger” penalties if they attempt to damage the American economy.

“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 wrote.

As Cryptopolitan reported, the warning came just one day after Trump announced a new 25% tariff on all vehicles not manufactured inside the U.S., which he said would go into effect on April 2. The White House confirmed the plan on Wednesday. The new tariffs will target foreign-made cars and light trucks and will pile onto the existing trade duties already enforced under Trump’s administration.

Trump expands tariffs to include foreign car parts

Will Scharf, a White House aide, said the new rules don’t just stop at cars. Starting in May, the administration will apply additional tariffs on engines, transmissions, and electrical parts brought in from outside the country.

These components are often used in American car production. Scharf said the plan is expected to generate “over $100 billion of new annual revenue” for the United States.

After the announcement, stock markets in the U.S. and Asia dropped sharply, especially shares tied to the auto industry. European automakers were expected to follow the same trend as their markets opened Thursday morning. The decision added another layer to the global trade war that has already affected several industries and regions.

Trump, who has already put duties on goods from China, Canada, and Mexico, as well as across the board on steel and aluminum, continues to argue that the U.S. is being taken advantage of by its biggest trading partners. The new auto tariffs are the latest move in what he sees as a long-overdue correction of global trade imbalances.

The White House defended the policy shift by saying it would “protect and strengthen” the American car industry. But many analysts said this could actually hit U.S. automakers as hard as it does foreign ones. That’s because most American carmakers depend heavily on imported parts to build their vehicles domestically.

EU and Canada signal retaliation plans, automakers panic

Neither the EU nor Canada has confirmed that they plan to work together against the U.S., but both have made it clear that they are considering responses to Trump’s new tariffs. On Thursday, Ursula von der Leyen, President of the European Commission, said the EU will continue looking for ways to negotiate while also defending its economy.

“We will continue to seek negotiated solutions, while safeguarding its economic interests,” she said. “Tariffs are taxes — bad for businesses, worse for consumers equally in the U.S. and the European Union.”

In Canada, newly elected Prime Minister Mark Carney called the new auto tariff “a direct attack.” Speaking to reporters in Kitchener, Ontario, Carney said he planned to hold an emergency cabinet meeting that same day to decide how to respond. “We will defend our workers, we will defend our companies, we will defend our country, and we will defend it together,” he said.

In Europe, carmakers are already feeling the heat. The European Automobile Manufacturers’ Association released a statement on Thursday saying it is “deeply concerned” about the move. The group said the timing couldn’t be worse, calling it “a watershed moment for our industry’s transformation and as fierce international competition mounts.”

Ludovic Subran, Chief Economist at Allianz, said on CNBC Thursday that no one should be surprised that Trump is going after the car industry. “Cars are so political,” Subran said during the “Squawk Box Europe” show. He also said the industry is already under pressure, with registrations down since January.

“You’ve seen the reaction of the stock markets, the car manufacturers. It comes at a time when there is a lot of uncertainty about car consumption, the registration of cars has slumped since the beginning of the year, so it is really another one of these major seismic waves of the Trump administration.”

While Trump pushes ahead, economists are warning that the policy will cause more harm than good. Many said the tariffs are likely to make cars more expensive in the U.S. and drive up inflation at a time when consumer confidence is already shaky.

Auto analysts from Wedbush Securities said the new rules could make some cars cost $5,000 to $10,000 more depending on the model and features.

“In our view these initial tariffs (if they hold in their current form) would be a hurricane-like headwind to foreign (and many U.S.) automakers and ultimately push the average price of cars up $5k to $10k depending on the make/model/price point,” the firm said in an emailed note Wednesday.

They added that this may still be a negotiation tactic by Trump rather than a final decision. “We continue to believe this is some form of negotiation, and these tariffs could change by the week, although this initial 25% tariff on autos from outside the U.S. is almost an untenable head-scratching number for the U.S. consumer,” they said.

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