As his aggressive trade policies threaten to disrupt the global economic order, the EU must brace for impact. European leaders are already seeing the effects of his approach to isolationism that has spurred a push for self-reliance in defense and trade with a second Trump presidency looming. The unexpected decision by Germany to lift its long-standing debt brake, allowing it to borrow without limit to bolster European defense, is a major shift. Led by Friedrich Merz, this move is part of the broader ‘ReArm Europe’ initiative, which is mobilising up to €800bn to counter potential threats as the U.S. withdraws support. However, while the EU is scrambling to strengthen security, it must also confront Trump’s relentless assault on global trade systems. Already, his administration has imposed 25% tariffs on Canada and Mexico, something it did despite having previously signed trade agreements with them. Now, the EU is in his crosshairs. On April 2, he plans to introduce new reciprocal’ tariffs on EU exports, with rates escalating for countries he deems unfair traders. Analysts warn that a 20% tariff on EU exports could result in an annual $200 billion decline, inducing potential recession in Europe. The EU has prepared retaliatory tariffs, but trade tensions will only increase uncertainty. However, avoidance of Trump’s ire has been the UK, though policies like the digital services tax could soon attract U.S. scrutiny. Global economic turbulence is already underway and one thing is clear: Could reshape global trade and the EU could be left to navigate a storm of tariffs, uncertainty, and recession risks, all thanks to Trump’s return.
Trump’s Trade Policies on Global Economy
