Europe’s top trade official will meet with US colleagues on Friday, as countries around the world grapple with how to respond to President Donald Trump’s tariff hammer strike, which has fuelled fears of a recession and prompted a global stock rout.
Nations from Canada to China have prepared to retaliate in an intensifying trade war after Trump hiked tariff barriers to their highest level in more than a century this week, causing a drop in global financial markets.
Prime Minister Shigeru Ishiba of Japan, one of the United States’ major trading partners, said the tariffs had created a “national crisis” as a drop in banking shares on Friday set Tokyo’s stock market on track for its worst week in years.
JP Morgan, an investment bank, now forecasts a 60% risk that the global economy will enter recession by the end of the year, up from 40% previously.
With European stocks about to suffer their worst weekly loss in three years, the European Union’s trade commissioner, Maros Sefcovic, will meet with his American colleagues.
The EU is divided on how best to respond to Trump’s tariffs, including on use of its ‘Anti-Coercion Instrument’, which allows the bloc to retaliate against third countries that put economic pressure on EU members to change their policies.
Countries that are cautious about retaliating and thereby raising the stakes in the standoff with the U.S. include Ireland, Italy, Poland and the Scandinavian nations.
The European Commission is nevertheless trying to finalise a list of U.S. imports worth up to 26 billion euros ($28 billion) on which to place retaliatory tariffs in response to U.S. tariffs on steel and aluminium.
The Commission, which coordinates trade policy for the EU’s 27 members, has still to work out how best to respond to the sweeping tariffs announced by Trump this week and an earlier announcement on car tariffs.
French President Emmanuel Macron led the charge by calling on companies to freeze investment in the U.S.
However, French Finance Minister Eric Lombard later cautioned against like-for-like countermeasures on the U.S. tariffs, warning this would also rebound on European consumers.
