Unlock the White House Watch newsletter for free
Your guide to what Trump’s second term means for Washington, business and the world
Brussels has the tools to hit back at the US for its latest round of tariffs, France’s trade minister said, as he rallied EU members to adopt “a united approach” to Donald Trump’s imposition of an additional 10 per cent levy on all imports.
Nicolas Forissier told the FT that Paris was in talks with EU counterparts and the European Commission over the US president’s decision, which followed a Supreme Court ruling that many of the existing tariffs he had levied on trading partners were illegal.
“Should it become necessary, the EU has the appropriate instruments at its disposal,” Forissier said on Saturday.
French officials said it was too early to speculate on an EU response but options included the “trade bazooka”, an Anti-Coercion instrument (ACI) that could affect US technology companies.
The ACI has a broad range of powers from export controls to tariffs on services as well as excluding US companies from EU procurement contracts.
There is also a suspended package of retaliatory tariffs on more than €90bn of US goods that could be deployed.
Forissier said Trump’s threats had forged EU unity but the bloc had to be prepared to retaliate. “We cannot any longer be naive,” he said. “We have to use our tools and not just speak about them.”
“We don’t want to be dependent. We don’t want to be some sort of hostage.”
The European parliament will meet on Monday to discuss postponing further the ratification of a trade deal agreed with Washington last year.
Trump is increasing tariffs despite evidence that they contribute to price rises and damage US companies reliant on imports.
Fabio Panetta, governor of the Bank of Italy, told a conference in Venice on Saturday: “Initially, the impact was absorbed by US firms’ profit margins, and was then partially passed on to consumers, who now bear about half of it.”
Panetta added that “overall, tariffs are estimated to have contributed just over half a percentage point to inflation, which remains above the Federal Reserve’s target”, at 2.4 per cent in January.
India’s trade ministry said that it was “studying all these developments for their implications”.
The US and India announced a framework for an interim trade agreement in February after months of stalled negotiations.
According to the agreement, India’s US tariff burden would fall from 50 per cent — one of the highest in the world — to 18 per cent after New Delhi agreed to open its economy to imports of most American industrial goods and some food products.
On Friday, Trump said that when it came to India, “nothing changes, they’ll be paying tariffs, and we will not be paying tariffs”.
Advisers to the Japanese government said that the Supreme Court’s decision would overshadow a summit in Washington next month between Trump and Prime Minister Sanae Takaichi, but was unlikely to derail it.
Even with a potentially lower tariff regime in prospect, Japan was unlikely to try to unravel the tariff-reduction deal it struck with the US last year, said one official.
Japan, which relies upon the US security umbrella, was the first big economy to negotiate a tariff deal with Trump that included a $550bn project financing and investment pledge that in theory deploys Japanese taxpayers’ money into the re-industrialisation of America. The deal reduced but did not eliminate the tariffs imposed by the US on its closest ally in Asia.
In China, the government-affiliated Global Times newspaper quoted an academic who criticised the “stubbornness” of the Trump administration’s reaction to the ruling and warned of a “period of turmoil in US tariff policy”.
A spokesperson for South Korea’s presidential office said the ruling had “undoubtedly increased uncertainty in the international trade environment”.
The Ministry of Trade said that, while the ruling nullified the 15 per cent tariff on Korea, other tariffs enacted under separate laws would remain in place including levies on cars and steel, two big Korean exports.
Indonesia’s ministry for economic affairs said it was “monitoring the latest developments”. The country finalised a trade deal with the US this week.
“The continuation of the [trade deal] remains dependent on the decisions of both parties. This means that Indonesia still needs to ratify this agreement, and it will not come into effect immediately,” the ministry said on Saturday.
Additional reporting by Leo Lewis in Tokyo, Arjun Neil Alim in Hong Kong, Andres Schipani in New Delhi, Daniel Tudor in Seoul and Diana Mariska in Jakarta