After the EU talked about pulling Canada closer to its orbit yesterday, it was only a matter of time before we see Trump respond with his distaste and displeasure over the situation.
And you can probably guess what his go-to response was to that. Yes, tariffs. Again.
The EU opened the door for Canada to become the bloc’s first-ever “associate member”, in an attempt to deepen trade and security cooperation. While the proposal itself is still rather loosely defined, the political message is much easier to understand. And that is Europe and Canada wanting to work more closely together.
Both sides have had increasingly difficult trade relations with the US, giving Europe and Canada another reason to deepen their existing economic and strategic ties. Of course, Trump was not impressed.
He called the idea “laughable” and said that if he viewed the move as a “hostile act”, then the US could respond with “very serious tariffs” or even stop trading with Europe on certain goods.
It’s funny how there is something almost predictable about how quickly the conversation got back to tariffs. From his perspective, the closer relationship between Europe and Canada is clearly touching a nerve.
Now, we are still a long way from Canada becoming anything resembling an EU member. The details of “associate membership” have barely been written. So for now, this is much more of a political signal than a finished institutional arrangement.
And while Trump hasn’t actually announced any new tariffs over this, markets are already getting a preview of how this issue could quickly become another source of US-EU trade friction.
And Washington’s preferred bargaining chip is hardly a mystery by now.
Tariffs. Surprise, surprise. Not.
For markets, the immediate issue isn’t a tariffs announcement but the reopening of another trade-policy fault line involving the US and Europe – particularly if the rhetoric starts moving toward autos, industrial goods or other politically sensitive sectors.
This article was written by Justin Low at investinglive.com.