Arizona Tribune - Trump's trade tempest: Week one

Here is a look at the nascent trade war:

- China sequel -

Trump announced last weekend that he would slap tariffs on imports from China, Mexico and Canada in response to the "extraordinary threat" posed by illegal immigration and drugs.

On Tuesday, as promised, Chinese products were hit with 10 percent tariffs.

Beijing swiftly retaliated, with 15 percent duties on US coal and liquefied natural gas and 10 percent levies on crude oil, machinery, pickup trucks and vehicles such as sports cars with large-displacement engines.

China's tariffs, however, "appear much less than proportional" as they target $14 billion worth of US goods while Trump's measures hit $525 billion worth of Chinese products, according to Goldman Sachs.

"However, the combination of countermeasures suggests a more coordinated and comprehensive approach by Chinese policymakers," an analyst at the US investment firm said.

They were referring to Beijing's decisions to launch an antitrust probe on US tech giant Google and impose restrictions on exports of critical minerals.

China also added the US fashion group that owns Tommy Hilfiger and Calvin Klein to a list of "unreliable entities".

Trump had already launched a trade war with China during his first term in office in 2017-2021.

Now all eyes are on whether Trump and Chinese President Xi Jinping will negotiate a settlement.

Trump had indicated that talks with Xi could take place early this week, but he then said Tuesday he was in "no rush" to speak with the Chinese leader.

- North American standoff -

The US leader had warned that he would impose 25-percent tariffs on Mexico and Canada, but both countries secured a one-month delay after 11th-hour talks with Trump.

He paused the measures after both countries vowed to step up measures to counter flows of the drug fentanyl and the crossing of undocumented migrants into the United States.

Trump's threats angered the US neighbours.

Canadians booed the US national anthem at hockey and basketball games.

Ontario, Canada's biggest province, announced plans to scrap a deal with Elon Musk's Starlink internet satellite service and ban American companies from bidding for government contracts.

But the province paused its measures after Trump put off the tariffs.

- Are the EU or Britain next? -

Trump warned on Sunday that tariffs on EU products would come "pretty soon", saying "it's an atrocity what they've done" in terms of trade with the United States.

Trump imposed tariffs on EU steel and aluminium during his first term in office.

On Sunday he complained that the United States buys "millions of cars" and "tremendous amounts of food and farm products" from the EU while the bloc imports "almost nothing" from the US.

Goldman Sachs analysts said tariffs could hit 40 percent of the EU's total exports to the United States, accounting for one percent of its gross domestic product.

European Commission President Ursula von der Leyen said Tuesday that the bloc "might have to engage in tough negotiations".

Europe, she said, "must make decisions not out of emotion or nostalgia for a world that once was, but rather out of calculated judgement about what is in our own interest in the world as it is today".

Trump also said the UK was "way out of line" but that something "can be worked out" with the country.

UK ministers have suggested that Britain might avoid US tariffs because the United States does not have a trade deficit with its ally.

Prime Minister Keir Starmer's spokesman said the British leader "has had a really constructive early set of conversations with President Trump".

- Companies brace -

Companies are bracing for the impact of tariffs.

US toy group Mattel, the maker of Barbie dolls and Hot Wheels cars, said Tuesday that it may have to raise prices as it imports components from China.

British alcoholic drinks group Diageo, which makes Don Julio tequila and Canadian whisky brand Crown Royal, said this week that its operating profit could take a $200 million hit if tariffs are imposed on Canada and Mexico.

The company, whose major brands include Guinness stout and Johnnie Walker whisky, scrapped a key sales target due to the uncertainty.

Automakers, which manufacture cars in Mexico where labour is cheaper, may want to move production to the United States.

"A vicious cycle is taking hold. Even if tariffs are not implemented, there is a loss of potential," Ana Boata, economist at insurance group Allianz Trade, told AFP.

She said "businesses do not invest" in times of uncertainty.

B.Torres--AT