Trump threatens EU and Canada with higher tariffs

President Donald Trump warned the European Union and Canada of potential tariff increases if they collaborate to harm the U.S. economy, though markets showed limited reaction to the threat.

“If the European Union works with Canada in order to do economic harm to the USA, large scale tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!” In a late-night Truth Social post, Trump stated.

The remarks follow ongoing trade tensions and reflect Trump’s emphasis on economic protectionism.

Financial markets remained stable despite the warning.

Bitcoin (CRYPTO:BTC) traded below $88,000, while Germany’s DAX futures dipped 0.3%.

Wall Street futures held steady, suggesting investors view the threat as manageable.

Federal Reserve Chairman Jerome Powell’s recent comments about tariffs’ inflationary effects being temporary may have contributed to the market’s resilience.

Analysts note that while Trump’s rhetoric signals heightened trade risks, broader economic indicators and central bank guidance are tempering immediate concerns.

The threat underscores Trump’s focus on bilateral trade dynamics, particularly with allies like the EU and Canada.

However, the lack of specific tariff figures or implementation timelines leaves uncertainty about the policy’s scope.

For now, markets appear to be pricing in geopolitical risks cautiously, with Bitcoin and equities avoiding sharp declines.

The situation highlights the interplay between political rhetoric and market sentiment, though sustained volatility could emerge if trade tensions escalate.

Trump’s stance aligns with his administration’s broader push to renegotiate trade terms, though critics argue unilateral tariffs risk retaliatory measures.

The EU and Canada have not yet responded publicly to the threat.

The stability in crypto and traditional markets contrasts with historical reactions to trade disputes, suggesting investors are prioritising macroeconomic fundamentals over short-term political statements.

Powell’s reassurance about inflationary pressures likely bolstered confidence, though prolonged trade conflicts could test this resilience.