Trump tariffs send shock waves through global economy – DW – 08/02/2025

A European Commission spokesperson in Brussels did not comment on the apparent delayed start of new US tariffs on imports from the European Union. 

EU Trade Commissioner Maros Sefcovic also has not touched the subject, only making general remarks regarding the executive order by US President Donald Trump.

“The new US tariffs reflect the first results of the EU-US deal, esp. the 15% all-inclusive tariff cap,” Sefcovic posted on X.

“This reinforces stability for [EU] businesses as well as trust in the transatlantic economy,” he added. “EU exporters now benefit from a more competitive position. The work continues.”

As a result of the negotiated deal between Trump and European Commission President Ursula von der Leyen, the EU had assumed that the new 15% cap on tariffs on almost all imports would come into force on August 1.

In particular, it was also expected that the current special tariffs on cars and car parts of 27.5% would be lowered to 15%.

But this was not mentioned in the executive order signed by Trump on Thursday. Instead, the order only deals with the tariffs, which Trump described as “reciprocal” and which are now to take effect a week later on August 7. 

The wine industry in France has urged the EU to “continue negotiations” with the United States to avert what it sees as a “brutal” impact from US tariffs.

The current trade deal between the US and the EU will apply a 15% tariff on wines and spirits form France.

“The impact of this duty will be all the more brutal as it goes hand in hand with the decline of the US dollar in the United States,” Gabriel Picard, president of the French wine and spirits exporters’ federation FEVS, said in a statement.

Picard warned that it “could lead to a 25 percent reduction” in wine and spirits sales in the United States, representing a loss of €1 billion.”

Jean-Marie Fabre, president of the union of independent winegrowers of France told broadcaster RMC that he hoped the industry could be “granted an exemption.”

Europe’s major wine growing countries, including France and Italy are currently pushing for zero tariffs for alcohol, including champagne, wines and spirits among carve-outs in the final deal, but those talks were ongoing.

“It is not our expectation that wine and spirits will be included as an exemption in the first group announced by the US tomorrow, and therefore that sector, as with all other economic sectors, will be captured by the 15% ceiling,” European Commission spokesman Olof Gill told a press conference. 

 “We are continuing to negotiate with our US partners,” he said.

Kosovo’s government removed trade tariffs for US products imported into Kosovo.

“We are grateful for our enduring relationship with the United States of America,” Prime Minister Albin Kurti said in a statement on X.

The Balkan nation had applied a 10% tariff on all goods from the United States.

 “Kosovo welcomes American products to its market,” said Kosovo’s caretaker Prime Minister Albin Kurti, announcing the policy.

“We strongly believe that this will affect the growth of trade exchange and increased investments,” he told his Cabinet.

Public opinion in Kosovo has been strongly pro-American since a 1999 US-led NATO air campaign that stopped the crackdown of Serbian armed forces on ethnic Albanians, which paved the way for Kosovo’s declaration of independence from Serbia a decade later.

Markets in the United States saw a sharp decline after  Donald Trump signed an executive order imposing duties on US imports from countries including Canada, Brazil, India and Taiwan.

The Dow Jones Industrial Average fell 633.77 points, or 1.44%, to 43,491.55, while the S&P 500 lost 107.59 points, or 1.70%, to 6,231.80, and the Nasdaq Composite lost 483.70 points, or 2.29%, to 20,638.74.

The CBOE Volatility Index, also known as Wall Street’s fear gauge, jumped to a near six-week high and was last up 20.66 points.

In addition to the tariffs, worries about a weakening US economy were heavily reinforced by Friday’s report on US job growth, which was lower than expected.

The US Labor Department reported that US employers added just 73,000 jobs last month, well short of the 115,000 that were forecast.

The Swiss government said Friday it would negotiate with the United States to try to avoid the tough 39% US tariff rate that would harm key industries.

On Thursday, Trump signalled Swiss imports would be taxed at 39%, higher than the 31% he threatened in April.

President Karin Keller-Sutter told Reuters the 39% figure was much higher than expected.

“The Federal Council is disappointed,” she said. “It is a pity that there is a tariff that is much higher than what we negotiated.”

Although the pharmaceuticals sector was not included in the tariffs, the increased duties would have a “very bad” effect on the Swiss economy, she said.

Pharmaceuticals constituted 60% of Swiss goods exports to the United States, followed by machinery and metalworking at 20% and watches at 8%.

Although the pharmaceuticals sector was not affected by the tariffs, the increased duties would be “very bad” for the Swiss economy, Keller-Sutter said. 

The US is a major trading partner for Switzerland, accounting for 18.6% of its total exports last year, according to Swiss customs data.

As other countries deal with the economic effects of negotiating with Donald Trump, the US president’s attention is focused at home on  Federal Reserve Chair Jerome Powell.

He urged the Fed’s board to “assume control” if Powell does not lower interest rates.

“Jerome ‘Too Late’ Powell, a stubborn MORON, must substantially lower interest rates, NOW. IF HE CONTINUES TO  REFUSE, THE BOARD SHOULD ASSUME CONTROL, AND DO WHAT EVERYONE  KNOWS HAS TO BE DONE!” Trump wrote on a social media post, using his customary capitalization for emphasis.

The Federal Reserve kept rates steady on Wednesday, and Powell said the central bank needed to wait for more data before deciding whether to adjust rates at their next meeting, in September.

The rate decision was made by a 9-2 vote, with two Fed governors dissenting for the first time in more than 30 years.

Trump nominated Powell to be Fed Chair in 2018, but the president has been escalating his ongoing feud with the central bank head ever since returning to office in January.

India is in trade talks with the United States to avoid a 25% tariff on Indian exports announced by President Donald Trump. 

A US delegation is expected in New Delhi later this month, a source told the Reuters news agency.

“We remain focused on the substantive agenda that our two countries have committed to and are confident that the relationship will continue to move forward,” India’s foreign ministry said in a statement.

Analysts warn the tariffs could hit $40 billion in Indian exports and strain ties with the key US ally in Asia.

On Wednesday, Trump also threatened to impose more penalties on India due to its trade with Russia and its membership in BRICS, a group of major emerging economies.

European stocks fell to a four-week low Friday as investors reacted to sweeping new US tariffs.

President Donald Trump announced steep levies on exports from dozens of trading partners, including a 39% tariff on Swiss goods, ahead of a key trade deal deadline.

The new rates are set to take effect August 7, but uncertainty remains over what Trump might do next.

The pan-European STOXX 600 index dropped 1.3%, with Germany’s DAX and Denmark’s OMXC also posting sharp losses.

Healthcare shares led the decline, falling sharply after Trump urged 17 major pharmaceutical firms to cut US drug prices. Denmark’s Novo Nordisk plunged nearly 5%, hitting a 4-year low.

Meanwhile, the US dollar headed for its strongest weekly performance in nearly three years against other major currencies.

A significant portion of the dollar’s strength is attributed to investors’ confidence that Trump’s tariffs have not yet harmed the US economy and have not significantly increased inflation.

South Africa is facing 30% tariffs on its US exports, after failing to secure a trade deal before Donald Trump’s deadline.

The country’s automotive industry, which employs 115,000 people, now fears major job losses.

DW’s Dianne Hawker reports.

Following the announcement that the Trump tariffs will come into effect on August 7, rather than August 1 as previously announced, South Africa has said it will use the coming week to strike a new deal.

The African country is currently facing a 30% tariff rate. Central bank governor Lesetja Kganyago has estimated the tariffs could cost 100,000 jobs.

“Within the window that’s still open, we’re hoping that we will find a way to settle this matter,” Ramaphosa told journalists.

“So intensive negotiations are now under way,” he said. “Our task is to negotiate as strongly and as hard as we can with the United States,” he said. “Our objective, really, is to save jobs.”

The US is South Africa’s second-biggest trading partner, after China, but Pretoria has said it will seek to boost its export markets, with Ramaphosa saying “it is too risky just to focus on one.”

The Trump administration has taken a particularly aggressive stance against South Africa since taking office, cutting vital aid and accusing it, without credible evidence, of committing genocide against white farmers.

The Trump administration has decided to lower the so-called “reciprocal” tariffs on Malaysia from 25% to 19%, both countries have confirmed.

The Malaysian government welcomed the “positive outcome”.

“This decision by the United States reflects the strong and enduring economic ties between our two nations,” Trade and Industry Minister Zafrul Abdul Aziz said.      

The Indian government is likely to cancel its defense deal with the US after the Trump administration’s decision to levy a higher tariff rate of 25% to Indian exports.

According to a Bloomberg report, India has informed the US that it is not keen to buy the F-35 stealth fighter jets, which Donald Trump had proposed to sell to India during Prime Minister Narendra Modi’s visit to the US in February this year.

However, India’s decision to cancel the deal has not been confirmed and Delhi has said it is looking to deepen trade talks with Washington as open as possible.

Prime Minister Mark Carney said Canada is “disappointed” by Trump’s decision to go through with the tariff hike.

US duties and tariffs will heavily affect lumber, steel, aluminum, and automobiles, Carney said in a statement.

To justify the step, the US cited the cross-border flow of the highly addictive and deadly drug fentanyl, even though Canada accounts for just 1% of US fentanyl imports and has been working intensively to further reduce the volumes, Carney added.

Carney said his government will diversify Canadian export markets and strengthen domestic investment in order to make “Canada strong.”

“Canadians will be our own best customer,” Carney said, adding that “we can give ourselves more than any foreign government can ever take away by building with Canadian workers and by using Canadian resources to benefit all Canadians.”

While Japan has welcomed the newly announced reciprocal tariff rates of 15% — down from the threatened 25% — it said that it will continue to discuss levies on auto exports, which were already facing 25% tariffs.

As the third-largest auto manufacturer in the world, Japan now wants to know when those duties might be lowered.

Japan “will continue to call on the US side promptly to take measures to implement the recent agreement, including reducing tariffs on automobiles and auto parts,” government spokesman Yoshimasa Hayashi said Friday.

Confusion also surrounds Trump’s claim that Japan — as a “signing bonus” — will invest $550 billion (€482 billion) in America, which will recoup 90% of the profits.

Sri Lanka will continue trade dialogue with US officials, the South Asian nation’s treasury secretary said on Friday after President Donald Trump announced a ‘reciprocal’ tariff of 20% on imports from the country.

The island nation “remains positive” that Sri Lanka and the US can reach a mutually beneficial situation on tariffs, the official told the journalists.

He said that he “is hopeful Sri Lanka can maintain regional and international competitiveness with these tariffs.”