Evelyn Reynolds

“That is what I see, that Donald Trump will buckle under pressure, that he corrects his announcements under pressure,” German economy minister Robert Habeck said Thursday.
Elsewhere, outgoing German Chancellor Olaf Scholz said he believed the latest tariff decisions by Trump were “fundamentally wrong,” according to a CNBC translation.
On Wednesday, Trump imposed 20% levies on the European Union, including on the bloc’s foremost economy Germany.

BERLIN, GERMANY – FEBRUARY 24: Robert Habeck, chancellor candidate of the German Greens Party, speaks to the media the day after German parliamentary elections on February 24, 2025 in Berlin, Germany. The Greens came in fourth place with 11.6% of the vote, down 2.9% from the previous election. (Photo by Sean Gallup/Getty Images)
Sean Gallup | Getty Images News | Getty Images

U.S. President Donald Trump will “buckle under pressure” and alter his tariff policies if Europe bands together, acting German economy minister Robert Habeck said Thursday.
“That is what I see, that Donald Trump will buckle under pressure, that he corrects his announcements under pressure, but the logical consequence is that he then also needs to feel the pressure,” he said during a press conference, according to a CNBC translation.

“And this pressure now needs to be unfolded, from Germany, from Europe in the alliance with other countries, and then we will see who is the stronger one in this arm wrestle,” Habeck said.
Allowing Trump to persist or trying to appease him would not be a successful strategy under any circumstances, he added, noting that the response should be a “day of determination.”
Strategically, the aim should be to avoid tariffs and a trade war, but the question was how to get there, the economy minister said.

Habeck also urged Europe to make strategic investments to become more independent — for example by improving its cloud infrastructure and expanding its artificial intelligence and space capabilities.
“We just can’t rely on everyone only being friendly to us anymore,” he said, pointing to having learned a lesson the hard way when Germany’s economy was hit badly due to its dependence on Russian energy after the Russia-Ukraine war started.

Germany paid a “high price for this blindness, for this economic and energy policy blindness” and that should now not repeat itself in “all other areas,” Habeck said, suggesting that this was a task for the incoming government.

‘Poorly thought through decisions’

Elsewhere, outgoing German Chancellor Olaf Scholz said he believed the latest tariff decisions by Trump were “fundamentally wrong,” according to a CNBC translation.
The measures are an attack on the global trade order and the “poorly thought through decisions” will result in suffering for the global economy, Scholz said. The U.S. administration is on a path that will only lead to losers, he added.

On Wednesday, Trump imposed 20% levies on the European Union, including on the bloc’s foremost economy Germany, as he signed a sweeping and aggressive “reciprocal tariff” policy.
Germany is widely regarded as one of the countries likely to be most impacted by Trump’s tariffs, given its heavy economic reliance on trade.
The U.S. is Germany’s most important trade partner ahead of China, with trade turnover — the sum of exports and imports — amounting to 252.8 billion euros ($278.7 billion) in 2024, according to German statistics office Destatis. Last year the U.S. was also the recipient of the biggest proportion of German exports.
The German index DAX was last down around 1.6% by 10:42 a.m. London time, while German government bonds were sharply lower. The yield on the 10-year Bund was last down by over 7 basis points to 2.648%, while the 2-year Bund yield tumbled more than 11 basis points to 1.93%.

EU preparing countermeasures

Also responding to the White House developments, European Commission President Ursula von der Leyen said that the European Union was preparing measures to counter the latest tariffs from U.S. President Donald Trump, if negotiations fail.
“We are prepared to respond,” she said. “We are now preparing for further countermeasures, to protect our interests and our businesses if negotiations fail.”
But von der Leyen also called for a shift “from confrontation to negotiation” as she suggested it was not too late for talks between the EU and the U.S.
Germany’s Scholz on Thursday echoed calls for cooperation and suggested Europe would defend its interests.
“Europe will react united, strong, and proportionally to the decision by the U.S.,” he said. More

The European Union is “preparing for further countermeasures, to protect our interests and our businesses if negotiations fail,” Ursula von der Leyen said early on Thursday.
U.S. President Donald Trump imposed 20% tariffs on the EU on Wednesday.
Von der Leyen also said that “there seems to be no order in the disorder, no clear path to the complexity and chaos that is being created.”

European Commission President Ursula von der Leyen holds a joint press conference with Antonio Costa at the end of the European Council Summit in Brussels, Belgium, on March 20, 2025.
Nurphoto | Nurphoto | Getty Images

The European Union is preparing measures to counter the latest tariffs from U.S. President Donald Trump, if negotiations with the White House fail, European Commission President Ursula von der Leyen said.
Trump imposed 20% levies on the bloc on Wednesday as he signed a sweeping and aggressive “reciprocal tariff” policy. Over 180 countries and territories are subject to these new duties, a list published by Trump and the White House showed.

In a livestreamed broadcast in the early hours of Thursday, EU chief von der Leyen suggested the bloc was ready to retaliate to the U.S. steps against it.
“We are prepared to respond,” she said. “We are now preparing for further countermeasures, to protect our interests and our businesses if negotiations fail.”
Calling for negotiations, von der Leyen said that the EU would work towards reducing barriers, not raising them.
“It is not too late to address concerns through negotiations,” she said. “Let’s move from confrontation to negotiation.”
Maros Sefcovic, the EU’s commissioner for trade and economic security, on Thursday said that he would be speaking to his U.S. counterparts on Friday.

“Unjustified tariffs inevitably backfire. We’ll act in a calm, carefully phased, unified way, as we calibrate our response, while allowing adequate time for talks. But we won’t stand idly by, should we be unable to reach a fair deal,” he said on social media platform X.
“I’ll speak to my U.S. counterparts tomorrow.”

‘Immense consequences’

Von der Leyen slammed Trump’s move, saying that it was a “major blow” to the world economy and that it would “massively suffer.”
“There seems to be no order in the disorder, no clear path to the complexity and chaos that is being created as all U.S. trading partners are hit,” von der Leyen said.
She also warned of “immense consequences,” saying the effect would be felt immediately and that consumers around the world as well as businesses would be negatively impacted.
“Uncertainty will spiral and trigger the rise of further protectionism. The consequences will be dire for millions of people around the globe, also for the most vulnerable countries, which are now subject to some of the highest U.S. tariffs.”
The EU would work to support impacted sectors, including the steel, autos, pharma and other industries, von der Leyen noted.
The EU chief said that she agreed with Trump that some countries were taking unfair advantage of the current rules in world trade and the EU was ready to support efforts to make the global trading system “fit for the realities of the global economy.”
However, she also warned the U.S. ‘reaching for tariffs as your first and last tool will not fix it.”

EU countermeasures so far

Von der Leyen on Thursday said that any fresh countermeasures against the U.S. would expand on those already in the works by the EU.
The bloc had already announced retaliatory tariffs last month after the U.S. imposed tariffs on , saying the measures aimed to protect European workers and consumers. The EU at the time said it would introduce counter-tariffs on 26 billion euros ($28 billion) worth of U.S. goods.
Previously suspended duties — which were at least partially in place during Trump’s first term as president — are set to be re-introduced alongside a slew of additional duties on further goods.
Industrial-grade steel and aluminum, other steel and aluminum semi-finished and finished products, along with their derivative commercial products, such as machinery parts and knitting needles were set to be included. A range of other products such as bourbon, agricultural products, leather goods, home appliances and more were also on the EU’s list.
Following a postponement, these tariffs are expected to come into effect around the middle of April. More

The White House Wednesday listed tariff rates for different countries. It didn’t take long for market observers to try and reverse engineer the formula.
Many observers said the U.S. appeared to have divided the trade deficit by imports from a given country to arrive at tariff rates for individual countries.
Such methodology doesn’t necessarily align with the conventional approach to calculate tariffs and would imply the U.S. would have only looked at the trade deficit in goods and ignored trade in services.
The U.S. also appeared to have applied a 10% levy for regions where it is running a trade surplus.

U.S. President Donald Trump speaks during a “Make America Wealthy Again” trade announcement event in the Rose Garden at the White House on April 2, 2025 in Washington, DC.
Chip Somodevilla | Getty Images

Markets have turned their sights on how U.S. President Donald Trump’s administration arrived at the figures behind the sweeping tariffs on U.S. imports declared Wednesday, which sent global financial markets tumbling and sparked concerns worldwide.
Trump and the White House shared a series of charts on social media detailing the tariff rates they say other countries impose on the U.S. Those purported rates include the countries’ “Currency Manipulation and Trade Barriers.”

An adjacent column shows the new U.S. tariff rates on each country, as well as the European Union.

Arrows pointing outwards

Chart of reciprocal tariffs.
Courtesy: Donald Trump via Truth Social

Those rates are, in most cases, roughly half of what the Trump administration claims each country has “charged” the U.S. CNBC could not independently verify the U.S. administration’s data on these duties.
It didn’t take long for market observers to try and reverse engineer the formula — to confusing results. Many, including journalist and author James Surowiecki, said the U.S. appeared to have divided the trade deficit by imports from a given country to arrive at tariff rates for individual countries.
Such methodology doesn’t necessarily align with the conventional approach to calculate tariffs and would imply the U.S. would have only looked at the trade deficit in goods and ignored trade in services.
For instance, the U.S. claims that China charges a tariff of 67%. The U.S. ran a deficit of $295.4 billion with China in 2024, while imported goods were worth $438.9 billion, according to official data. When you divide $295.4 billion by $438.9 billion, the result is 67%! The same math checks out for Vietnam.

“The formula is about trade imbalances with the U.S. rather than reciprocal tariffs in the sense of tariff level or non-tariff level distortions. This makes it very difficult for Asian, particularly the poorer Asian countries, to meet US demand to reduce tariffs in the short-term as the benchmark is buying more American goods than they export to the U.S., ” according to Trinh Nguyen, senior economist of emerging Asia at Natixis.
“Given that U.S. goods are much more expensive, and the purchasing power is lower for countries targeted with the highest levels of tariffs, such option is not optimal. Vietnam, for example, stands out in having the 4th largest trade surplus with the U.S., and has already lowered tariffs versus the U.S. ahead of tariff announcement without any reprieve,” Nguyen said.
The U.S. also appeared to have applied a 10% levy for regions where it is running a trade surplus.

The Office of the U.S. Trade Representative laid out its approach on its website, which appeared somewhat similar to what cyber sleuths had already figured out, barring a few differences.
“While individually computing the trade deficit effects of tens of thousands of tariff, regulatory, tax and other policies in each country is complex, if not impossible, their combined effects can be proxied by computing the tariff level consistent with driving bilateral trade deficits to zero. If trade deficits are persistent because of tariff and non-tariff policies and fundamentals, then the tariff rate consistent with offsetting these policies and fundamentals is reciprocal and fair,” the website reads.
The U.S.T.R. also included estimates for the elasticity of imports to import prices—in other words, how sensitive demand for foreign goods is to prices—and the passthrough of higher tariffs into higher prices of imported goods.
This screenshot of the U.S.T.R. webpage shows the methodology and formula that was used in greater detail:

A screenshot from the website of the Office of the United States Trade Representative.

Some analysts acknowledged that the U.S. government’s methodology could give it more wiggle room to reach an agreement.
“All I can say is that the opaqueness surrounding the tariff numbers may add some flexibility in making deals, but it could come at a cost to US credibility,” according to Rob Subbaraman, head of global macro research at Nomura.
 — CNBC’s Kevin Breuninger contributed to this piece. More

Analysts generally had a pessimistic take on the announcement, with some even predicting an increased risk of a recession for the U.S.
Most note that the tariff will raise rates to levels not seen since the early 20th century, when the U.S. enacted the Smoot/Hawley Act.

Charts that show the “reciprocal tariffs” the U.S. is charging other countries are on display at the James Brady Press Briefing Room of the White House on April 2, 2025 in Washington, DC. 
Alex Wong | Getty Images

U.S. President Donald Trump on Wednesday laid out the “reciprocal tariff” rates that more than 180 countries and territories will face under his sweeping new trade policy.
The announcement sent stocks tumbling and prompted investors to seek refuge in assets perceived to be safe.

Analysts generally had a pessimistic take on the announcement, with some even predicting an increased risk of a recession for the U.S.
Here is a compilation of reactions from experts and analysts:
Tai Hui, APAC Chief Market Strategist, J.P. Morgan Asset Management
“Today’s announcement could potentially raise U.S. average tariff rates to levels not seen since the early 20th century. If these tariffs persist, they could materially impact inflation, as U.S. manufacturing struggles to ramp up capacity and supply chains pass on costs to consumers. For instance, advanced semiconductor manufacturers in Taiwan may not absorb tariff costs without viable substitutes.
“The scale of these tariffs raises concerns about growth risks. U.S. consumers may cut back on spending due to pricier imports, and businesses might delay capital expenditures amid uncertainty about the tariffs’ full impact and potential retaliation from trade partners.”

David Rosenberg, President and founder of Rosenberg Research
“There are no winners in a global trade war. And when people have to realize, when you hear this clap trap about how consumers in United States are not going to bear any brunt. It’s all going to be the foreign producer. I roll my eyes whenever I hear that, because it shows a zero understanding of how trade works, because it is the importing business that pays the tariff, not the exporting country.
And a lot of that will get transmitted into the consumer, so we’re in for several months of a very significant price shock for the American household sector.”
Anthony Raza, Head of Multi-Asset Strategy, UOB Asset Management
“They’ve come up with the most extreme numbers that we can’t even comprehend. How they’re coming up with these? And then in terms of timing, I think we were hopeful that maybe this would be something that was rolled out over the course of a year, that would allow like time for negotiations or whatever. But it does seem like the timing is much more immediate and is, again, worse than our worst-case type scenario in terms of flexibility.”
David Roche, Strategist, Quantum Strategy”These tariffs are not transitional. They are core to President Trump’s beliefs. They mark the shift from globalisation to isolationist, nationalist policies – and not just for economics. The process will last several years and be felt for decades. There will be spillovers into multiple policy domains such as geopolitics.Right now, expect retaliation, not negotiation by the EU (targeting U.S. services) and China (focusing on U.S. strategic and business interests). The Rose Garden tariffs will cement the bear market. They will cause global stagflation as well as U.S. and EU recession.”
Shane Oliver, Head of Investment Strategy and Chief Economist, AMP
“Our rough calculation is that the 2nd April announcement will take the U.S. average tariff rate to above levels seen in the 1930s after the Smoot/Hawley tariffs which will in turn add to the risk of a U.S. recession – via a further blow to confidence and supply chain disruptions – and a bigger hit to global growth.
“The risk of a US recession is probably now around 40% and global growth could be pushed towards 2% (from around 3% currently) depending on how significant retaliation is and how countries like China respond with policy stimulus.”
Tom Kenny, Senior International Economist, ANZ
“Today’s announced US reciprocal tariffs are worse than expected. The effective tariff rate on U.S. merchandise imports is likely to climb to the 20-25% range, the highest since the early 1900s.Yields on inflation-indexed bonds were higher and equities sold off after the announcement, suggesting the market thinks these tariffs will hurt growth and add to inflation. Market pricing of the federal funds rate points to cuts from the Federal Reserve coming sooner.” More