Live Updates: U.S. Inflation Shows Improvement Amid Worries About Tariffs and Trade Wars
Consumer prices rose 2.8 percent in the year through February, a slightly better result than economists had expected. But analysts are worried that tariffs could add to future price pressures.
Inflation eased more than expected in February, a welcome sign for the Federal Reserve as it grapples with the prospect of a sharp slowdown in growth as a result of President Trump’s trade war.
The Consumer Price Index was up 2.8 percent from a year earlier, after rising another 0.2 percent on a monthly basis. That was a step down from January’ssurprisingly large 0.5 percent increase and came in below economists’ expectations.
The “core” measure of inflation, which strips out volatile food and fuel prices to give a better sense of the underlying trend, also ticked lower. The index rose 0.2 percent compared to the previous month, or 3.1 percent from a year earlier. Both were below January’s increase.
The data from the Bureau of Labor Statistics underscored the bumpy nature of the Fed’s progress toward its 2 percent goal. Prices for consumer staples, such as eggs and other grocery items, are rising steeply again, but costs for other categories like gasoline fell.
Economists worry that Mr. Trump’s tariffs and the global trade war they have provoked will eventually add to prices, but also dent growth. Uncertainty about the trajectory of the president’s trade policies has amplified fears that businesses will begin to freeze hiring and investment in a more significant way as they await clarity on the scope and scale of Mr. Trump’s plans.
Those concerns have also materialized in recent measures tracking how consumers feel about the future. According to the latest survey from the Federal Reserve Bank of New York, consumers’ expectations about their financial situation in the year ahead “deteriorated considerably,” as they braced for inflation sticking to around 3.1 percent. The share of consumers now expecting to be in a worse situation financially a year from now rose to its highest point since November 2023. The average perceived likelihood of missing a future debt payment rose to the highest level since April 2020.
A combination of slowing growth and resurgent price pressures puts the Fed in a difficult position, given its mandate to pursue low, stable inflation as well as a healthy labor market.
As of January, Fed officials justified their ability to hold off on another round of interest rate cuts and wait for more progress on inflation because the economy was doing well. If that resilience starts to show signs of cracking before inflation is fully vanquished, the Fed may be more limited in how it responds.
When the Fed had to deal with a trade war during Mr. Trump’s first term, it lowered interest rates by a total of three-quarters of a percent in 2019 in an effort to protect the economy from weakening further.
In his most detailed comments yet about Mr. Trump’s tariffs, Jerome H. Powell, the Fed chair, acknowledged last week that the economic backdrop this time was different. “We came off a very high inflation and we haven’t fully returned to 2 percent on a sustainable basis,” he said at an event on Friday.
Mr. Powell added that the Fed’s typical response to tariffs would be to “look through” any one-time increase, but stressed that officials would be watching for any shocks and how long-term inflation expectations were shifting. “As we parse the incoming information, we are focused on separating the signal from the noise as the outlook evolves,” he said. “We do not need to be in a hurry, and are well positioned to wait for greater clarity.”
That suggests the Fed will extend its pause on rate cuts when officials gather next week, maintaining the current range of 4.25 to 4.5 percent.
Traders in futures markets are betting that the Fed will be able to cut rates three times this year, each by a quarter of a point. That is more cuts than predicted just a couple of weeks ago, reflecting rising anxiety about the economic outlook.
With inflation still above the Federal Reserve’s 2 percent target, economists and policymakers are on high alert for anything that may rekindle price pressures and make the central bank’s job all the more difficult.
Most of the focus in recent weeks has been on the side effects of President Trump’s trade war amid an array of tariffs. But one economist warns that high government debt levels pose a risk, too.
New research by Ernie Tedeschi, the director of economics at the Budget Lab at Yale and a chief economist at the White House Council of Economic Advisers under the Biden administration, underscores the linkage between government indebtedness and higher inflation.
“When you deficit finance policies, that is going to put upward cost pressure on American households,” Mr. Tedeschi said in an interview. Deficit financing involves using borrowed money to pay for government spending, like tax cuts and other policies.
As the recent pandemic era showed, the generous fiscal stimulus programs spearheaded by the Trump and Biden administrations stoked demand at a time when supply chains were severely constrained, ultimately heating up inflation. The Federal Reserve was then forced to take aggressive action by raising interest rates, further increasing the costs born by households.
Mr. Tedeschi estimates that a sharp rise in the deficit of around 1 percent of gross domestic product — roughly the same cost of extending the tax cuts Republicans are eyeing before they expire this year — would lower the purchasing power of American households as much as $1,250 on average after five years.
If the Fed were to respond to rising price pressures by increasing interest rates, that is likely to feed through to not only higher mortgage payments, but also those related to automobile loans and those for small businesses. Mortgage payments alone could rise as much as $1,240 per year in today’s housing market, he found.
After 30 years, the cumulative loss per household from price pressures could reach $16,000. Household wealth, once adjusted for inflation and factoring in higher mortgage costs, could decline as much as $36,000 on average.
Mr. Trump and his top economic advisers have made reining in government spending a cornerstone of the administration’s economic agenda, with Treasury Secretary Scott Bessent recently calling for a “detox” from government spending.
But economists are skeptical about how much progress the president will make, especially given the haphazard nature so far of the cuts spearheaded by Elon Musk and his Department of Government Efficiency.
The Republican budget plan recently approved by the House calls for $2 trillion in spending cuts but $4.5 trillion in tax breaks.
“If you are truly worried about debt and deficits for debt and deficits’ sake, then you really need to be just as worried about revenues,” Mr. Ernie said “As in, don’t cut taxes.”
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Today’s inflation numbers are reassuring, but it’s never a good idea to focus too much on one month of data. Over the past three months, overall consumer prices have risen at an annual rate of 4.3 percent, up from under 3 percent late last year. Core prices over the past three months have risen at an annual rate of 3.6 percent.
This is one of the final big data points the Fed gets before it gathers for its next policy meeting March 18-19. Officials are expected to hold interest rates steady at 4.25 to 4.5 percent. To cut again, they have said they need to see additional progress on inflation or signs that the labor market is weakening. The central bank is also keeping tabs on President Trump’s policies, which economists worry could raise price pressures and dent growth.
The Consumer Price Index always gets more attention, but in some ways the more important data this week is the lesser-known Producer Price Index, which will be released tomorrow. That measures wholesale prices, which are likely to show the impact of tariffs — and concern about potential future tariffs — earlier than consumer prices.
The Producer Price Index also includes several data points that feed directly into the Fed’s preferred inflation gauge, the Personal Consumption Expenditures Price Index, which will be released later this month.
The inflation data is welcome news for the Federal Reserve, which has been looking for fresh signs that inflation is falling back toward its 2 percent goal. But one concern is that this progress could be rewound if President Trump sticks to his plans for tariffs against major trading partners. Economists worry that such levies will raise consumer prices to some extent.
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Shelter prices rose more slowly in February, up 0.3 percent from January and 4.2 percent from a year earlier. Housing is the biggest monthly expense for most households, and has been a particularly stubborn category of inflation.
The cooldown in February was mostly because of slower growth in hotel prices, which had jumped in January, not people’s primary residences. Rents for primary residences have been rising as well, but more slowly.
U.S. car insurance prices rose only modestly in February after a huge jump in January. Prices are still up more than 11 percent over the past year, however.
Egg prices rose 10.4 percent in February, as an outbreak of avian influenza continued to contribute to a nationwide egg shortage. That’s slightly lower than the previous month’s 15 percent surge in prices. Since last year, egg prices are up 58.8 percent.
Producers have blamed the spread of avian flu, which has forced them to cull millions of hens, for tighter egg supplies and record high prices. But the Justice Department is in the early stages of investigating major egg producers in the United States over possible antitrust violations as the price of eggs skyrockets.
The fresh inflation data is certainly welcome news to the stock market this morning. Futures on the S&P 500 have lurched higher, now up more than 1 percent.
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These numbers are meaningfully better than forecasters were expecting, and suggest that concerns about tariffs aren’t yet feeding into consumer prices in a big way — or at least they weren’t when the data was collected in February.
U.S. consumer prices rose 0.2 percent in February and were up 2.8 percent from a year earlier. “Core” prices, excluding volatile food and energy categories, rose 0.2 percent from a month earlier and 3.1 percent from a year ago.
The data overall came in better than expected. Economists had forecast consumer prices to rise 0.3 percent for the month, or 2.9 percent on a year-over-year basis. Core prices showed more of an improvement than initially predicted, too.
Stocks are higher heading into today’s U.S. inflation report, but it comes after another volatile week that dragged the S&P 500 lower on Monday and Tuesday. Futures on the S&P 500, which give investors the ability to trade the index before markets officially open, rose around 0.8 percent this morning.
The European Union is putting tariffs on a range of products from the United States in retaliation to President Trump’s steel and aluminum tariffs, and items that come from Republican-held states rank high on the hit list.
The European Union plans to institute the tariffs in two phases: The first wave will take hold on April 1, and will impact goods that already had tariffs applied during Mr. Trump’s first term, such as bourbon, boats and motorcycles. For certain products like whiskey and Harley-Davidson motorcycles, those tariffs would be as much as a crushing 50 percent.
The second wave is still being figured out, though the list of products that could be affected is already public — and is 99 pages long. In that phase, the E.U. is planning to add levies to goods worth about 18 billion euros, or 19.6 billion dollars, and is aiming for them to go into effect on April 13.
The proposed goods include:
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Poultry, beef and pork
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Soybeans
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Wine and sparkling wine
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Beer
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Pants, shirts and other clothing
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Handbags
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Refrigerators
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Washing machines
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Mowers
Exactly what those tariffs will look like remains to be seen. For now, Europe is consulting consumers, companies and policymakers across the 27-nation bloc as it finalizes the list. Many of the potential targets are largely produced in Republican-held areas, such as crops from the Louisiana district that elected Mike Johnson, the House speaker, and livestock from Nebraska and Kansas.
The goal? Officials want to hit America where it hurts in order to force the United States to the negotiating table, while doing as little damage as possible to Europeans.
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Britain is parting company with the European Union by not retaliating to the tariffs that President Trump imposed on steel and aluminum imports on Wednesday, as Prime Minister Keir Starmer calculates that he can negotiate a trade deal with the United States that would spare his country in the long term.
The approach contrasts sharply with that of the European Union, which hit back swiftly with retaliatory measures on American exports, including Harley-Davidson motorcycles, bourbon and jeans, and top European officials have warned about the uncertainty Mr. Trump’s policies are causing. By contrast, British officials have expressed only muted disappointment that they have been swept into Mr. Trump’s protectionist net.
Mr. Starmer said in parliament that he was “disappointed” by the global tariffs on steel and aluminum but Britain would take a “pragmatic approach.” A new trade deal would include tariffs, he added, and Britain would “keep all options open.”
But Mr. Starmer believes that he can ultimately persuade Mr. Trump that Britain’s trade relationship with the United States is balanced.
Britain runs either an $89 billion trade surplus or a $14.5 billion deficit with the United States, depending on whether one cites British or American statistics. The difference rests in part on how the two sides treat offshore financial centers such as Jersey and Guernsey, which are crown dependencies.
“He was working hard, I’ll tell you that,” Mr. Trump said, after Mr. Starmer lobbied him against tariffs at a White House meeting late last month. “He earned whatever the hell they pay him over there.”
Mr. Starmer has also been pushing Mr. Trump to provide American security guarantees to Ukraine as part of a peace negotiation with Russia. The two leaders have spoken regularly by phone since their meeting, as Mr. Starmer has tried to help heal Mr. Trump’s rift with President Volodymyr Zelensky of Ukraine.
But Britain’s decision not to retaliate to the tariffs could complicate Mr. Starmer’s other big priority: to draw his country closer to the European Union after Brexit. The crisis over Ukraine has given the prime minister a chance to collaborate with the European Union on defense and security, and he clearly hopes it could lead to closer trade and economic links.
The divergent responses to the tariffs are a reminder that, in some respects, Britain still faces a choice between the United States and Europe.
Daisuke Wakabayashi and Joe Rennison
Daisuke Wakabayashi reported from Seoul and Joe Rennison from New York.
Stocks rose on Wednesday after a tumultuous few days of trading following President Trump’s decision to impose tariffs on some of the United States’ biggest trading partners and retaliatory measures by the European Union, China and Canada.
Futures on the S&P 500, which allow investors to trade ahead of exchanges opening, were slightly higher. The Euro Stoxx 50 index, which comprises the eurozone’s largest listed companies, was up more than 1 percent in morning trading. Shares in Britain, Germany and France all broadly gained.
In Asia, stock markets in Japan, South Korea and Taiwan nudged higher. Those indices were seen as among the most exposed if President Trump broadened tariffs on longstanding trading partners. Hong Kong’s Hang Seng Index, a market that had been a bright spot in Asia, fell nearly 1 percent — a fourth straight day of decline.
As stock markets seemed to regain their footing on Wednesday, the European Union said it was implementing tariffs in retaliation to Mr. Trump’s 25 percent duty on steel and aluminum imports, which went into effect earlier in the day.
The European Commission called the U.S. tariffs on steel and aluminum “unjustified.” It said it would impose levies on a wide range of American goods that would take effect on April 1. Ursula von der Leyen, the president of the European Commission, said the tariffs were nearly equal in value to the metals duties being applied by the Trump administration.
The rise in stock prices reversed some of losses from earlier in the week and followed another turbulent trading day on Wall Street, after the White House introduced and then rolled back new tariffs. The whipsaw on tariffs has added to investors’ confusion over the Trump administration’s economic policy.
Recent waves of selling have left the S&P 500 index nearly 10 percent below its mid-February record. Falling more than 10 percent would signify a symbolic milestone known on Wall Street as a correction.
“Uncertainty breeds volatility,” said Alan McKnight, chief investment officer at Regions Bank. “Right now the level of uncertainty continues to ratchet up.”
The CBOE’s Vix volatility index, known as Wall Street’s fear gauge, has risen in recent days, a sign of investor jitters.
“Investors are having a tough time discerning what they should expect on a go forward basis,” Mr. McKnight said. “It’s not just about it being good or bad. It’s about getting some clarity.”
The volatility is extending to how foreign investors are moving money in and out of markets in Asia. Khoon Goh, head of Asia Research at Australian bank ANZ, said foreign investors are turning “cautious” because of uncertainty regarding U.S. trade policy.
“Rising investor concerns over the impact of tariffs on U.S. growth is spilling over into Asian equities,” Mr. Goh wrote in a report.
Shares in Australia fell for a second straight day after the White Houseruled out any exceptions or exemptions on its steel and aluminum tariffs. Last month, Mr. Trump said he would give “great consideration” to exempting Australia because it buys more goods from the United States than it sells. During Mr. Trump’s first term, he exempted Australia from steel and aluminum tariffs.
Anthony Albanese, Australia’s prime minister, said he would not impose reciprocal tariffs because they would only hurt Australian consumers by pushing up prices. But he condemned tariffs as an economic policy, calling them “a form of economic self-harm and a recipe for slower growth and higher inflation.”
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France’s European affairs minister, Benjamin Haddad, said on Wednesday that Europe had the capacity to add to the list of tariffs it had already imposed. “We have the means, if we so wish, to go further,” he said in an interview with French television channel, TF-1, citing intellectual property and digital services as potential targets.
Christine Lagarde, the president of the European Central Bank, warned that the level of uncertainty caused by the trade war and shifting international alliances was “exceptionally high” and could make it harder to manage inflation. “Our expectations have indeed been swept aside in the last few years, and in the last few weeks in particular,” she said at a meeting of E.C.B. officials, economists and analysts. “We have seen political decisions that would have been unthinkable only a few months ago.”
President Trump’s imposition of tariffs on all steel and aluminum imports could make it more expensive to produce cars in the United States, dealing another blow to automakers already facing the potential of rising steel prices because of other policies from his administration.
Top of mind for auto executives was the bid by the Japanese steel maker Nippon Steel to buy U.S. Steel. Many of them had hoped that Mr. Trump would be open to negotiating a deal to allow the acquisition to go ahead. Instead, the president confirmed last month that he opposed the proposed deal.
Many auto industry executives believe that the merger could have increased competition and supply in the American steel industry, ultimately lowering steel prices.
In the United States, U.S. Steel and Cleveland-Cliffs are the only major American producers of the high-finish steel favored by automakers. Cleveland-Cliffs has long sought to acquire its rival, but such a merger has raised concerns in the auto industry that it could create a monopoly, giving the combined company the power to raise prices.
By contrast, industry groups expected the proposed Nippon Steel deal to preserve competition in the market. The Alliance for Automotive Innovation, a trade group representing major U.S., Japanese, and European automakers, expressed support for Nippon Steel’s acquisition, saying that a Cleveland-Cliffs-led deal would result in “anti-competitive pricing of materials.”
Even after former President Joseph R. Biden Jr. rejected the deal in January, Nippon Steel continued efforts to revive it. Cleveland-Cliffs has recently indicated that it remains interested in bidding for the financially troubled U.S. Steel. Last month, Mr. Trump reiterated that U.S. Steel must remain American-owned, and said he would block Nippon Steel from taking a controlling stake in the company.
For automakers struggling with challenges such as rising competition from Chinese rivals, costly technological transitions, and signs of a slowdown in U.S. consumer spending, the new steel tariffs are expected to further squeeze profits. The 25 percent levies, which went into effect on Wednesday, are expected to cause steel prices in the United States to rise about 16 percent compared to prices in 2024, according to the research firm Wolfe Research.
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Japan’s chief cabinet secretary, Yoshimasa Hayashi, said the imposition of the new U.S. tariffs without an exemption for Japan was “regrettable.” Imports from Japan are crucial to the competitiveness of American manufacturing and have significantly contributed to the U.S. economy and jobs, Hayashi said at a news conference.
Japan exports only small amounts of aluminum to the United States, but it is America’s sixth-largest source of foreign steel.
President Trump’s mercurial approach to trade policy is creating volatility in investment flows from Asia’s foreign investors. Khoon Goh, head of Asia Research at the Australian bank ANZ, said foreign investors are turning “cautious” due to uncertainty regarding U.S. trade policy. “Rising investor concerns over the impact of tariffs on U.S. growth is spilling over into Asian equities,” Goh wrote in a report.
The spokeswoman for China’s Ministry of Foreign Affairs, Mao Ning, repeated Beijing’s position that recent American trade policies violate the World Trade Organization’s free trade rules. “We will take firm measures to safeguard our legitimate rights and interests,” she said, without providing details of possible responses by China.
European Union leaders have been clear that they want to negotiate with the United States on trade to avoid a full-blown conflict. But with no deal in sight, officials announced a plan on Wednesday that is meant to hit back hard as steel and aluminum tariffs come into effect.
President Trump has imposed 25 percent tariffs on all global steel and aluminum imports, including products that contain those metals, such as cookware and window frames. Given that breadth, the European Union said that the U.S. levies might affect some 26 billion euros — $28 billion — of the bloc’s exports.
So the bloc announced a plan that is meant to retaliate in equal measure.
The response will come in two parts. The bloc had increased tariffs on a range of goods in retaliation to U.S. measures during Mr. Trump’s first term, but they were suspended under the Biden administration. That suspension will be allowed to lapse on April 1, increasing tariffs on billions of euros worth of products that include boats, bourbon and motorcycles.
The bloc’s second step, it said, would be to place tariffs on about €18 billion worth of additional products. Representatives from countries across Europe will consult for two weeks before officials finalize the list of affected products.
Items that have been proposed for inclusion are industrial and agricultural. They are meant to target products — including soybeans, beef and chicken — that are important exports from Republican strongholds. Those include the Louisiana district that elected Mike Johnson, the House speaker.
The goal is to have the new measures in force by mid-April.
The announcement was Europe’s opening move in an unfolding trade conflict — one that is widely expected to intensify over the month ahead.
For the bloc, the American steel and aluminum tariffs are just the start of what Mr. Trump has threatened. He has repeatedly vowed to set wide-ranging tariffs on American trading partners globally as soon as April 2. He has suggested that levies on cars in particular could be 25 percent, a figure that would be painful for German and Italian automakers.
“We’re now in this escalating spiral,” said Carsten Brzeski, the global head of macro research at the bank ING.
On the one hand, the European Union does not want to escalate the trade war. European officials have called tariffs “economically counterproductive,” warning that a tit-for-tat tariff fight would harm everyone involved.
“Tariffs are taxes,” Ursula von der Leyen, the president of the European Commission, the bloc’s executive arm, said in a televised statement on Wednesday. “Jobs are at stake, prices up, nobody needs that.”
But the Trump administration has been reluctant to negotiate, which is pushing European policymakers to adopt a more aggressive stance.
“I traveled to the U.S. last month; I was seeking constructive dialogue to avoid the unnecessary pain of measures and countermeasures,” Maros Sefcovic, the European Commission’s top trade official, said during a news briefing this week. “In the end, as it is said, one hand cannot clap. The U.S. administration does not seem to be engaging to make a deal.”
E.U. leaders emphasized on Wednesday that the bloc’s response is intended to be proportionate, and Mr. Sefcovic stressed that they were avoidable “if the U.S. administration accepts our extended hand.”
Mr. Trump’s tariffs come at a tough moment for the European economy. After several years of flagging growth, businesses across the bloc are staring down the prospect of worsening trade conditions that could hurt their overseas business.
Groups representing the German steel industry, for instance, have said that the tariffs come at an “inopportune time,” when producers in the European Union are dealing with cheap competition from China.
Europe has not been caught by surprise, at least. A trade-focused group within the European Union, colloquially called the “Trump task force,” spent much of last year preparing for various trade conflict scenarios.
But it has been hard for Europeans — and other American trading partners — to decide how to respond. It is also not clear what Mr. Trump’s goals are or which ones will ultimately be retained, because his administration has made a habit of threatening and then backtracking, at least temporarily.
“It’s hard to know what is going to stick and what’s not going to stick,” said Michael Strain, the director of economic policy studies at the American Enterprise Institute in Washington, which recently hosted an event with Mr. Sefcovic.
European officials have also struggled to get their American counterparts on the phone. Ms. von der Leyen has not spoken individually with Mr. Trump since his inauguration.
Asked at a news conference on Sunday when she might speak to him, she said: “We will have a personal meeting when the time is right.”
Kaja Kallas, the bloc’s chief diplomat, was supposed to meet with Marco Rubio, the American secretary of state, in Washington in late February, but Mr. Rubio canceled that meeting.
And diplomats from across the European Union and its member countries have struggled to identify whom to talk to in the Trump administration, in part from a lack of clarity about how decisions are being made.
“I do think there’s a level of consternation at the objectives of the administration,” said Jörn Fleck, senior director with the Europe Center at the Atlantic Council, a Washington-based research institution.
He said that Europe might struggle more to respond in a world in which the United States does not want to simply make a deal, but rather wants to fundamentally reorder the global trade order so that more is produced in the United States.
“Maybe there isn’t any deal to be had,” he said.
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India is a steel and iron exporter, though it’s not one of the countries most affected by the new U.S. tariffs. Only a fraction of the $33 billion worth of steel imported by the United States in 2024 came from India. But President Trump’s tariffs are weighing heavily on Indian minds this week.
India’s commerce minister, Piyush Goyal, just returned from a weeklong trip to Washington and it has been reported that he will travel there again later this month. On Tuesday, the White House singled out India for its high tariffs on alcohol and farm products.
“Jobs are at stake, prices up — nobody needs that,” Ursula von der Leyen said in a televised address from Strasbourg, France. The E.U. is trying to emphasize that these tariffs are proportionate: They do not want to make this trade war worse, they seem to be stressing. They want to bring America to the negotiating table.
The E.U.’s 99-page list of American products that could be impacted by its new tariffs includes everything from women’s blouses to frozen fowl to raspberries. The bloc is asking for public feedback on its list, and the idea is that it will be edited and finalized before mid-April. The goal is to hit products that will hurt the U.S. but minimize disruption for Europeans.
South Korea’s trade minister, Cheong In-kyo, will visit Washington this week to try to find ways of “minimizing” the impact of the Trump administration’s new tariffs on the South Korean economy, his office said in a statement. He planned to meet with senior American officials, including the U.S. trade representative, during the two-day trip that will begin on Thursday, it said.
Neil Western
South Korea is among the countries that will be most affected by the tariffs. It is one of the top foreign exporters of the metals to the United States, ranking fourth for steel last year, according to the U.S. International Trade Administration. It has exported nearly 2.8 million tons of steel to the United States since March 2024.
According to data from the American Iron and Steel Institute, five of the top ten steel exporters to the United States are in Asia. Last year, more than one-third of U.S. steel imports came from Canada and Mexico. Another quarter was sourced from South Korea, Vietnam, Japan, Taiwan and China. South Korea was the largest Asian exporter, accounting for roughly 10 percent of U.S. steel imports.
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Britain’s trade secretary, Jonathan Reynolds, said on Wednesday that the new tariffs were “disappointing.” The country was negotiating a wider economic agreement with the U.S. to eliminate additional tariffs, he said in a statement. “We will keep all options on the table and won’t hesitate to respond in the national interest.”
In a separate statement, the British Chambers of Commerce said that the new tariffs would hit consumers and businesses in both Britain and the United States. It added that retaliatory tariffs should only be an option of last resort.
“Tariffs mean prices and costs will inevitably go up and this is a lose-lose scenario for consumers, businesses, and economic growth,” William Bain, the group’s head of trade policy, said in a statement.
This move from the E.U. is like the opening bid in a chess game. Officials know that President Trump has promised further tariffs on Europe as soon as April 2, so the U.S.-E.U. trade conflict is likely to escalate further. This response is narrowly focused on steel and aluminum, but it’s a first glimpse of what is coming.
The E.U.’s 2018 and 2020 countermeasures — the ones now set to snap back on April 1 — were a response to Trump’s first-term trade war. The bloc designed them to inflict maximum political pain in America with minimum pain for Europe. For instance, they hit Kentucky Bourbon hard, because that would impact then-Senate Majority Leader Mitch McConnell.
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