The world reacts with caution to US ‘reciprocal’ tariffs against dozens of nations

Thursday, 3 April 2025

The sweeping new tariffs announced by US President Donald Trump were met initially with measured reactions from key trading partners, highlighting the lack of appetite for a full-fledged trade war.

The fact that the tariffs fell most heavily on parts of the world sleeping through the night appeared to at least temporarily delay some of the potential outrage.

Trump presented the import taxes, which he calls “reciprocal tariffs” and range from 10% to 49%, in the simplest terms: the US would do to its trading partners what he said they had been doing to the US for decades.

“Taxpayers have been ripped off for more than 50 years,” he said. “But it is not going to happen any more.”

The president promised that “Jobs and factories will come roaring back into our country.” He framed it not just as an economic issue, but a question of national security that threatens “our very way of life.”

‘Nobody wants a trade war’

Shortly after Trump's announcement, the British government said the United States remains the UK’s “closest ally.”

Business Secretary Jonathan Reynolds said the UK hoped to strike a trade deal to “mitigate the impact” of the 10% tariffs on British goods announced by Trump.

“Nobody wants a trade war and our intention remains to secure a deal,” said Reynolds. 'But nothing is off the table and the government will do everything necessary to defend the UK’s national interest.”

British officials have said they will not immediately retaliate, an approach backed by the Confederation of British Industry, a major business group.

Italy’s conservative Premier Giorgia Meloni described the new 20% tariffs against the European Union as “wrong,” saying they benefit neither side.

“We will do everything we can to work towards an agreement with the United States, with the aim of avoiding a trade war that would inevitably weaken the West in favour of other global players,” Meloni said in a Facebook post.

“In any case, as always, we will act in the interest of Italy and its economy, also by discussing with other European partners,” she added.

‘No basis in logic’

Some countries took issue with the White House's calculations.

Australian Prime Minister Anthony Albanese said the US tariffs imposed on his country were totally unwarranted, but Australia will not retaliate.

“President Trump referred to reciprocal tariffs. A reciprocal tariff would be zero, not 10%,” said Albanese. The US and Australia have a free trade agreement and the US has a $2-to-$1 trade surplus with Australia. “The administration’s tariffs have no basis in logic and they go against the basis of our two nations’ partnership. This is not the act of a friend.”

Trump said the United States bought US$3 billion of Australian beef last year, but Australia would not accept US beef imports. Albanese said the ban on raw US beef was for biosecurity reasons.

‘Talking closely with exporters’

New Zealand’s approach mirrored Australia’s, with Prime Minister Christopher Luxon ruling out retaliatory tariffs.

“There’s about $900 million worth of tariffs being levelled at New Zealand exporters, and that will be passed onto US consumers sadly,” Luxon said. “It ends up driving higher prices for US consumers, higher inflation, slows down growth and as a result that puts real pressure in across the world.”

But if New Zealand were to retaliate, Luxon said, it would only mean higher prices for New Zealand consumers.

Trade Minister Todd McClay said the Government was taking time to understand what effect the 10% tariff rate imposed by the US would have on the New Zealand economy, but had asked officials to clarify with Washington that New Zealand did not impose a 20% tariff rate on US imports as stated by Donald Trump on Thursday morning.

“US exporters, the average is about 1.9% they face in New Zealand, that would take it below 17% … we'll make the case in Washington today,” he told reporters in Parliament.

McClay explained the sweeping tariffs imposed by the US were likely to impact on international trade, inflation and currency rates, which would effect the New Zealand economy. He understood it would be a blanket 10% tariff rate.

“Whilst this is not unexpected this is something that will have an impact on New Zealand exporters,” he said. “We are talking closely with exporters.”

“Tariffs rates and trade wars in themselves are not good for the world economy, there will be some impact, and that will flow through to New Zealand.”

He had already made the case to the US about New Zealand’s low tariff rate, he said.

Waiting to take action

Spared for the moment from the latest round of tariffs were Mexico and Canada, so far as goods that already qualified under their free trade agreement with the United States. Yet, the previously announced 25% tariffs on auto imports were scheduled to take effect at midnight.

Mexico President Claudia Sheinbaum said on Thursday she would wait to take action on Friday when it was clear how Trump’s announcement would affect Mexico.

“It’s not a question of if you impose tariffs on me, I’m going to impose tariffs on you,” she said in a news briefing Wednesday morning. “Our interest is in strengthening the Mexican economy.”

Canada had imposed retaliatory tariffs in response to the 25% tariffs that Trump tied to the trafficking of fentanyl.

The European Union, in response to the steel and aluminium tariffs, imposed taxes on 26 billion euros’ worth of US goods, including bourbon, prompting Trump to threaten a 200% tariff on European alcohol.

Little to gain

As Trump read down the list of countries that would be targeted, he repeatedly said he didn’t blame them for the tariffs and non-tariff barriers they imposed to protect their own nations’ businesses. “But we’re doing the same thing right now,” he said.

“In the face of unrelenting economic warfare, the United States can no longer continue with a policy of unilateral economic surrender,” Trump said.

Speaking from a business forum in India, Chilean President Gabriel Boric warned that such measures, in addition to causing uncertainty, challenge the “mutually agreed rules” and the “principles that govern international trade.”

Ultimately, Trump announced Chile would face the baseline reciprocal tariff of 10%. The US is Chile’s second most important trading partner after China.

Analysts say there’s little to be gained from an all-out trade war, neither in the United States or in other countries.

“Once again, Trump has put Europe at a crossroads,” said Matteo Villa, senior analyst at Italy’s Institute for International Political Studies.

“If Trump really imposes high tariffs, Europe will have to respond, but the paradox is that the EU would be better off doing nothing,” he added.

Villa also noted that retaliation would certainly be a further “blow” to the United States, but it would hurt Europe even more, as the EU bloc depends more on exports to the US than vice versa.

“On the other hand, Trump seems to understand only the language of force, and this indicates the need for a strong and immediate response,” Villa said. “Probably the hope, in Brussels, is that the response will be strong enough to induce Trump to negotiate and, soon, to backtrack.”

– AP with STUFF