China Warnings from the EU after Trump's announcement of higher tariffs

US President-elect Donald Trump has heightened concerns in Berlin and the EU with his announcement of high tariffs on goods from Mexico, Canada and China.

Outgoing EU foreign policy chief Josep Borrell warned of a trade war and at the same time emphasized the Europeans' readiness to defend themselves: "We are ready to take countermeasures," he threatened on the sidelines of a meeting of foreign ministers from seven leading industrial nations (G7) in Fiuggi, Italy.

German Economics Minister Robert Habeck warned that everyone would lose in the end, including the USA. The EU must react as one, "not split up into two or three country blocs, but speak together as Europe", he warned at an industry conference in Berlin.

German industry is also concerned. "In principle, we can wait for the EU and Germany to appear on the list. That would do us massive damage," said the President of the Federation of German Industries, Siegfried Russwurm. The competitive pressure on Germany and Europe would then be further increased.

Trump's orders on his first day

On his first day in office, Trump wants to impose high import tariffs on all goods from Mexico and Canada as well as additional tariffs on goods from China. This will be one of his first executive orders on January 20, Trump explained on the Truth Social platform, which he co-founded. Tariffs are a type of surcharge on imported goods. They are payable at the border.

Duties of 25 percent are to apply to goods from Mexico and Canada. The US President-elect justified this with immigrants who bring crime and drugs across these two borders into the USA. Until this stops, the tariffs should remain in force. Both Canada and Mexico have the power to solve the problem. "We hereby call on them to use their power," said Trump.

Additional tariffs of 10 percent are to apply to goods from China. Trump also justified this with the fact that drugs such as the deadly fentanyl were entering the USA from that country. Although China has announced that it will take action against this, it has not done so.

US President Joe Biden, who is still in office, met China's head of state Xi Jinping on the sidelines of the Asia-Pacific Economic Community (Apec) summit in the Peruvian capital Lima just over a week ago. Xi had assured Biden there that he also wanted to work together with the future US administration under Trump.

China's warnings

A spokesperson for the Chinese embassy in Washington warned against a trade conflict. "No one will win a trade war or a tariff war," wrote Liu Pengyu on the X platform. Economic and trade cooperation between China and the USA is beneficial for both sides. There has also been progress in the fight between the two countries against the drug fentanyl.

In a statement published on X, the Canadian government emphasized the close ties between the two economies. It was a "balanced and mutually beneficial relationship".

Canada buys more goods from the USA than from China, Japan, France and the UK combined. In addition, around 60 percent of US oil imports come from Canada. The New York Times reported that Canada's Prime Minister Justin Trudeau spoke to Trump immediately after his announcement.

Trump's election promises

Trump had already announced far-reaching tariffs during the election campaign. He argued that US companies would then produce more in the USA again and that this would create jobs. It is the classic "America First" policy that the Republican already pursued during his first term in office.

Democratic US President Biden also relied on protectionism. He not only largely retained Trump's China tariffs, but also imposed new tariffs - on electric cars, for example. While Biden focused relatively specifically on certain industries, the tariffs announced by Trump are more far-reaching.

Consequences for inflation

Many experts fear that this isolationist policy will lead to higher prices, as many goods from abroad cannot be produced in the USA overnight. Companies will therefore continue to rely on imports from abroad for production - import duties will then increase costs.

It is expected that companies will pass these costs on to consumers. In addition, affected countries are likely to respond with counter-tariffs - which in turn is bad news for exporting US companies.

Trade conflicts from Trump's first term in office

Washington and Beijing have been embroiled in a trade conflict for years. The US also imposed economic sanctions and export restrictions to make it more difficult for Beijing to access US technology and restricted US investments in China.

Trump also imposed tariffs on certain products from Mexico and Canada, such as steel and aluminum, during his first term in office. He repeatedly engaged in disputes with both countries and imposed conditions to avert punitive tariffs.

SDA