EditTariffs – Trump’s dangerous ‘magic wand’
Negotiating a trade deal with the Trump II administration is destined to be an uphill battle
In an approach to trade policy that can only be described as chaotic, President Donald Trump, just five months back in office, has upended the post-World War II consensus on the value of free trade and ripped up the rule book on trade negotiations.
Trump has long regarded tariffs as a magic wand to end trade imbalances, deal with a range of grievances and to Make America Great Again.
Just 12 days into his second term in office, on 1 February, President Trump signed an Executive Order imposing new tariff on imports from Canada, Mexico and China.
Using the Nixon era International Emergency Economic Powers Act (IEEPA) Trump announced what the White House described as “bold action to hold Mexico, Canada and China accountable” for illegal immigration and for “stopping poisonous fentanyl and other drugs” flowing into the U.S.
Days after signing the order, the President announced a 30 day pause on the measures to facilitate discussions with Canada and Mexico.
Three weeks into his Presidency Trump announced that steel and aluminium tariffs of 10% introduced during his first term were to be raised to 25% from 12 March.
In a rambling address to Congress on 4 March tariffs “a beautiful word” were the key focus for the President. Complaining that the U.S. was mistreated by ‘friend and foe alike’ Trump announced that “reciprocal tariffs” would be introduced against countries that had “taken advantage of the U.S”.
Two days later adjustments to the tariffs imposed on Canada and Mexico in February were announced “to minimise disruption to the automotive industry.”
On 2 April, Trump, signed an Executive Order 14257, which he labelled “our declaration of economic independence”. The order imposed a 10% baseline tariff to imports from all countries – except Canada and Mexico – and introduced variable country specific “reciprocal tariffs” on over 80 nations. The reciprocal rate for the EU was set at 20%, at the lower end of the scale.
The Executive Order, tanked markets and was widely criticised by political leaders.
The ‘baseline tariffs came into effect from 5 April, however on 9 April hours before they were due to come into effect the ‘reciprocal tariffs” were put on hold for 90 days to allow for negotiations. The White House Trade Advisor Peter Navarro spoke of “90 deals pending in 90 days”.
On 8 May, the 80th Anniversary of VE Day President Trump and the UK Prime Minister announced agreement on a trade deal. While still to be finalised, this is the only trade deal that has come close to the ‘finish line’ so far.
The 9 April ‘pause’ did not apply to China which announced retaliatory levies of 84% on US imports resulting in the US increasing its tariffs to 145%. On 12 May however China and the US agreed to pause their tariffs, again for a 90-day period. The agreement also saw the US cut its tariff rate on China from 145% to 30% while China cut its rate on US imports from 125% to 10%.
On 23 May Trump announced on social media that because the talks with the EU “were going nowhere” as of 1 June US tariffs on EU imports would rise from 20% to 50%. Two days later following a “very nice phone call with the EU Commission President Trump announced a delay on the new EU tariffs until 9 July.
On 30 May Trump announced that he intended to immediately double the tariff on steel and aluminium imports from the 25% he announced in February to 50%. The announcement was made at an event in a Pittsburgh steel plant where he praised a ‘blockbuster’ deal agreed between US Steel and the Japanese company Nippon.
The deal between Nippon and US Steel had been blocked by the Biden administration in January. It had also been opposed by Trump. The tariff hike, Trump assured his audience of steelworkers would “even further secure the steel industry in the United States” an obvious cover for his U-turn on the deal with Nippon.
As May ended, a new ‘player’ arrived on the pitch when the New York based US Court of International Trade decided, unanimously, that Trump’s “Liberation Day” tariffs exceeded the powers given to the U.S. President by the 1997 Act. The decision, widely celebrated in the markets and blasted by the White House as judicial overreach, was put on hold the following day by the US Court of Appeals. It will be back in the courts in June and could well be heading for the US Supreme Court.
Challenging Times
In addition to his long running fixation on protectionist policies as a means of addressing ‘the decline of the U.S and promoting a return to US prosperity, President Trump displays a particular animus for the EU referring to it as having been set up to ‘screw’ the US. That animosity is echoed by key players in his administration and amongst the wider MAGA ‘community’.
The US Defence Secretary described Europe in the infamous leaked Signal chat as ‘pathetic’. Treasury Secretary Scott Bessent has spoken of the need to “light a fire under the EU” to make progress on tariffs, overlooking the origin of the problem. In February Vice President Vance in a no holds barred speech at the Munich Security Conference took anti EU sentiment to another level questioning European commitment to democratic principles, flagging concerns about the Romanian presidential election, speaking of his shock at Brussels where “commissars” issue warnings to EU citizens and concluding that in the EU (and the UK) free speech was “in retreat’.
All of this suggests that negotiating a trade deal with the Trump II administration is destined to be an uphill battle. The point has been made recently that while Trump has adopted a carrot and stick towards China, he has adopted a stick-only approach to the EU.
The Bruegel Institute noted in a recent assessment, that while some member states and regions could suffer particularly badly from Trump’s tariff war and require protective measures, overall, the economic impact of Trump’s policy direction “appears manageable”. A key to ensuring that that is the case is for the EU member states to ‘stick together’ and to ensure that a solid and united front is maintained through the negotiations with Washington.
EUalive’s columnist Dick Roche was the Minister of State for European affairs when Ireland conducted the two referendums on the Treaty of Lisbon of the European Union, in 2008 and 2009. His other columns can be found here.
Caption: Shipping containers are stacked at a container terminal near the Miami International Airport in Miami, Florida, USA, 8 May 2025. During his second presidency, US President Donald Trump significantly expanded the use of protective tariffs, intensifying his ‘America First’ trade program. [EPA-EFE/CRISTOBAL HERRERA-ULASHKEVICH]
Updated: June 3, 2025 - 06:22
