U.S.-EU trade tensions rise as tariffs spark economic fears
Consumers in the United States expect that the prices of goods and services will increase by 3.9 per cent annually over the next 5 to 10 years, according to Bloomberg. These are the most pessimistic forecasts since 1993, influenced by Donald Trump's tariff policies.
US President Donald Trump is fulfilling his campaign promises to introduce and increase tariffs on imported goods from Canada, Mexico, China, and the EU.
American consumers anticipate challenging impacts from the Republican's policies. They believe that prices will rise at a rate of 3.9 per cent annually over a 5 to 10-year period, according to data from the University of Michigan.
"US consumer sentiment fell to a more than two-year low and long-term inflation expectations jumped by the most since 1993, illustrating growing apprehension about the economic impact from tariffs," notes Bloomberg. "The preliminary March sentiment index dropped to 57.9, the lowest level since November 2022," the agency adds.
Donald Trump warns of economic problems
President Donald Trump, in a recent interview with Fox News, admitted that his administration is taking very serious actions, which may lead to a transition period or disruptions in the economy.
The President's statement, combined with the escalation of the trade war, triggered a strong reaction of panic in financial markets. Trump's words further intensified a rapid sell-off driven by concerns over the impact of tariffs on US economic growth.
Experts from the American advisory firm Oxford Economics downgraded the GDP growth forecast for the US in 2025 by 0.4 percentage points, bringing it down to 2.0 per cent. They also made significant adjustments to the GDP forecast for Canada and Mexico due to tariffs imposed on these countries.
Escalation between the US and the European Union
In response to the US imposing tariffs on foreign steel and aluminum on Wednesday, the European Commission announced retaliatory tariffs by the EU on goods from the US worth $28 billion (CAD 40 billion).
Initially, the EC will reinstate tariffs from the first presidency of Donald Trump — covering American alcohol, Harley-Davidson motorcycles, and jeans produced mainly in Republican-led or electorally key states. These are set to take effect from April 1st.
"If this Tariff is not removed immediately, the U.S. will shortly place a 200% Tariff on all WINES, CHAMPAGNES, & ALCOHOLIC PRODUCTS COMING OUT OF FRANCE AND OTHER E.U. REPRESENTED COUNTRIES. This will be great for the Wine and Champagne businesses in the U.S," announced Donald Trump on the Truth Social platform.
