President Donald Trump has issued a warning to the European Union and Canada, cautioning them against coordinating efforts to counter his administration’s upcoming tariff policies, Fortune reports.
Trump stated that any attempts to “do economic harm” to the United States would result in even more severe trade penalties.
In a post on Truth Social early this morning, Trump declared:
“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!”
This statement follows Trump’s recent announcement of a 25% tariff on all automobile imports into the US, regardless of origin. The decision has sparked strong reactions from key trade partners.
European Commission President Ursula von der Leyen responded swiftly, stating:
“Tariffs are taxes—bad for businesses, worse for consumers equally in the US and the European Union.”
Von der Leyen also confirmed that the EU would assess the impact of the automotive tariffs and other measures expected from the Trump administration. Meanwhile, Canada’s new Prime Minister Mark Carney called the move a “very direct attack”, vowing to defend Canadian workers and industries.
The latest tariff threats have contributed to uncertainty in financial markets. Mark Haefele, chief investment officer at UBS Global Wealth Management, noted that while tariffs pose risks, UBS still expects the US economy to grow around 2% this year, aligning with historical trends.
However, a Deutsche Bank survey released earlier this week found that 43% of analysts believe the US could enter a recession within the next year, with tariffs being one of the contributing factors.
Markets responded negatively to the tariff news:
The S&P 500 fell 1.12%, with tech giants like Nvidia (-5.74%) and Tesla (-5.58%) among the worst performers.
The Magnificent 7 stocks collectively dropped 3%, erasing recent gains.
Defensive sectors such as consumer staples (+1.42%) and utilities (+0.7%) saw slight gains.
While Trump’s auto tariffs aim to protect domestic manufacturers, some US automakers may still face challenges. According to a Goldman Sachs analysis, companies like Tesla, Rivian, General Motors, and Ford could struggle with supply chain adjustments and potential retaliatory tariffs from other nations.
Goldman analysts noted:
“There are some scenarios where US automakers can fully offset tariffs, or even benefit, but much depends on pricing strategies and supply chain shifts.”
As the Trump administration prepares to implement its latest round of tariffs—dubbed “Liberation Day” by the president—trade tensions with key allies are set to escalate. The EU and Canada have not announced immediate countermeasures but are assessing their options.
