For the second time in a week, President Trump has threatened to disrupt trade with a key ally in retaliation for a trade dispute that he initiated — a strategy that could either lead to negotiations or escalate into more significant economic conflicts.
On Thursday morning, Mr. Trump sought to pressure the European Union into compliance, warning in a social media post that he would impose a 200 percent tariff on European wine and Champagne if the EU did not withdraw its 50 percent tariff on U.S. whiskey—a measure that the EU enacted in response to tariffs on global steel and aluminum imposed by Mr. Trump on Wednesday.
On Tuesday, Mr. Trump employed a similar approach with Canada, threatening to double the 25 percent tariffs on Canadian steel and aluminum unless Ontario lifted a surcharge on electricity exported to the United States. This charge had been instated after Mr. Trump imposed additional tariffs on Canada earlier this month.
After Ontario suspended its surcharge, Mr. Trump backed down from his threats.
In recent weeks, Mr. Trump has overseen a perplexing and potentially economically damaging cycle of tariff threats and levies, engaging in a global game of brinkmanship as he attempts to persuade some of the U.S.’s closest allies and trading partners to yield.
Mr. Trump has wielded these tariff threats without apparent concern for their economic repercussions and, increasingly, seemingly without considering their effects on the stock market. The S&P 500 fell again on Thursday following Mr. Trump’s warnings to Europe and his reaffirmation at the White House of impending substantial tariffs.
When queried about potentially easing tensions with Canada, which sent officials to the U.S. on Thursday to mitigate trade frictions, Mr. Trump responded: “I’m not going to bend at all.”
He asserted that the United States didn’t rely on imports like lumber and energy from Canada, one of America’s major trading partners. “We don’t need anything they have,” he stated.
The president, during a meeting with NATO Secretary General Mark Rutte, acknowledged that his tariffs might cause “a little disruption” but maintained that “it won’t be very long.”
“And we have to do this,” he added. “I’m sorry, we have to do this.”
Treasury Secretary Scott Bessent, when asked on Thursday about market instability and the economic impact of tariffs, stated that the White House was unconcerned “about the short term.”
“We’ve got strategic industries we need to protect,” Mr. Bessent remarked. “We want to safeguard the American worker.”
Commerce Secretary Howard Lutnick also cautioned other nations against retaliatory measures, stating in an interview with Bloomberg TV on Thursday that Mr. Trump could respond impulsively.
“If you make him unhappy, he responds negatively,” Mr. Lutnick said.
Mr. Lutnick indicated that some countries, like Britain and Mexico, had carefully considered their business interactions with the U.S. However, for nations that retaliate with further tariffs, “the president’s going to deal with them with strength and power,” he warned.
It remains uncertain whether other countries will introduce their own tariffs and, if so, how many economic disputes may escalate into genuine tit-for-tat trade wars. Mr. Trump has indicated that more tariffs on cars and other products are expected in April.
Some governments, like those in Australia, Brazil, Britain, Japan, and Mexico, have opted not to retaliate yet, as they explore alternative ways to ease tensions with Mr. Trump. Meanwhile, China, the European Union, and Canada have reached different conclusions.
Those governments may feel encouraged by domestic political pressures to resist Mr. Trump’s coercion or, in the cases of Europe and China, bolstered by the strength of their economies.
Some officials in Europe have stated they will not capitulate under pressure. In a statement on Wednesday, Ursula von der Leyen, president of the European Commission, emphasized that Europe must act to “protect consumers and businesses” and would implement “strong but proportionate” countermeasures.
“We will not yield to threats,” asserted Laurent Saint-Martin, France’s foreign trade minister, in a post on X. He added that Mr. Trump “is escalating the trade war he initiated.”
Canadian officials have also generally been vocal against the United States, a response that may be heightened by a political transition and an approaching federal election in Canada.
“If you strike us, we will respond,” Chrystia Freeland, a former Canadian finance minister, remarked in an interview on UJ on Thursday. Ms. Freeland noted that while Canada may be smaller, it holds leverage in the economic relationship as the largest export market for the United States by a significant margin.
“Canada is a more vital export market for the U.S. than China, Japan, the U.K., and France combined,” she highlighted. “You are the country that coined the phrase ‘the customer is always right.’ Well, we are your biggest customer.”
On Thursday, Canada initiated a dispute at the World Trade Organization regarding the steel and aluminum tariffs that Mr. Trump had imposed a day prior. China had previously initiated a complaint over a different set of tariffs last month. However, the W.T.O. challenges are largely symbolic since the United States has effectively disabled the organization’s dispute resolution system during Mr. Trump’s first term.
Canadian officials were anticipated to meet with Mr. Lutnick on Thursday to discuss trade matters. Meanwhile, a spokesperson for the European Commission indicated that Maros Sefcovic, the EU’s trade commissioner, would engage with both Mr. Lutnick and Jamieson Greer, the U.S. trade representative, on Friday.
Jeanna Smialek and Matina Stevis-Gridneff contributed reporting.
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