EU shares tumble after Canada, China, Mexico trade wars
- US President Donald Trump is set to hold talks with the leaders of Canada, Mexico to discuss the punishing tariffs he is imposing on the neighbouring countries as well as China.
- This comes as US Secretary of State Marco Rubio travelled to Panama to tell its leader to end China’s alleged influence over the Panama Canal or face action from Washington.
What you need to know about NAFTA
US President Trump’s new 25 percent tariffs on Canada and Mexico is a blow to the North American Free Trade Agreement (NAFTA).
The NAFTA, which was signed by the US and its two neighboring countries in 1991, entered into force in 1994.
The treaty lifted most of the tariffs and other trade barriers on products and services as of the day it was implemented, aiming to gradually create a fully established free market among the three nations.
The agreement also provided regulations as to how to resolve related disputes among companies and the signatory countries, aiming to promote fair competition and trade.
The countries also agreed on other additional rules related to free trade such as ones to protect intellectual property, labour and the environment.
Trade skyrocketed among the three nations after the implementation of the NAFTA, which paved the way for unprecedented economic integration in the region.
Trump believes the NAFTA undermines US jobs and its manufacturing industry, saying that it should be renegotiated.
We should negotiate with President Trump on trade: Finland’s PM Orpo
Finland’s Prime Minister Petteri Orpo said on Monday that Europe should negotiate with US President Donald Trump on trade. He added that Russia will be a permanent threat to European countries.
“The most important issue that we all need to understand is that Russia is a threat, a real threat, this is not an opinion this is a fact,” he told reporters ahead of an informal EU leader retreat in Brussels.
Answer to trade tariffs is replying with same measures: Luxembourg PM
The answer to trade tariffs is to reply with the same measures, Luc Frieden has said, speaking at an informal EU defence retreat in Brussels.
“I think tariffs are always bad. Tariffs are bad for trade. Tariffs are bad for the United States”, he said, adding that trade tariffs were not on the EU’s leaders’ agenda on Monday.
US and Europe need each other, warns EU vice president
“There are no winners in a trade war; we need America and America needs us,” the vice president of the European Commission, Kaja Kallas, has said in response to Trump’s threats of imposing tariffs on the EU.
“If the US and Europe start a trade war, the one laughing on the side is China.”
What countermeasures will Beijing deploy next?
In terms of the tariffs imposed on China, the key question to ask is, of course, what will Beijing do next? China has said countermeasures are coming, although we don’t know what those measures might be. Some important context to keep in mind is that the domestic situation in China faces a number of challenges at the moment, including youth unemployment, low consumer spending, and the property sector crisis.
However, exports remain a bright spot for the economy. So, it remains to be seen just how far China intends to take these tariff countermeasures, and indeed, what the method of retaliation might be. There are some tools in its kit – things like export controls, import controls, and restrictions on US businesses operating in China. What we don’t know at this stage is whether Beijing will opt to use those.
China has faced this before, and perhaps one advantage might be that it has the experience of feeling the heat from the first Trump administration. What it learned from that was the importance of diversification, in terms of bolstering trade ties with regions like Southeast Asia, Central Asia and Africa, as that provides some insulation against whatever heat might be coming from the US.
European shares drop as Trump’s tariffs rattle markets
European shares have retreated on Monday, joining a global selloff amid fears that US President Donald Trump’s latest tariffs could escalate into a broader trade war.
The pan-European STOXX 600 index was down 1.4 percent as of 08:10 GMT. Futures for Wall Street’s S&P 500 also fell 1.3 percent.
Automakers, which are vulnerable to trade duties, sank 3.5 percent. Porsche AG, BMW, Volkswagen, Mercedes-Benz and Stellantis fell in the range of 3.7 percent to 6.5 percent.
Technology was also among the chief losers, falling 2.5 percent.
Earlier, Trump warned that tariffs on Europe will “definitely happen”, but did not offer any clarity over his plans.
