Trump issues new tariff warnings towards the EU and China.

On Tuesday, U.S. President Donald Trump promised to impose tariffs on the European Union and mentioned that his administration was considering a 10% punitive tax on Chinese goods due to fentanyl being transported from China to the U.S. through Mexico and Canada.

Trump expressed his recent tariff threats in statements to reporters at the White House, a day after he assumed office, without immediately implementing tariffs as he had pledged during his campaign. Financial markets and trade organizations briefly sighed in relief on Tuesday, but his recent remarks highlighted Trump’s enduring push for wider duties and a new Feb. 1 deadline for 25% tariffs targeting Canada and Mexico, alongside tariffs on China and the EU.

Trump stated that the EU and various other nations also possessed concerning trade surpluses with the United States.

“The European Union is extremely detrimental to us,” he stated, echoing remarks from Monday. “Therefore, they will be subject to tariffs.” “It’s the only method … you’ll achieve fairness.” On Monday, Trump mentioned he was thinking of applying tariffs on Canada and Mexico if they did not address the smuggling of illegal immigrants and fentanyl, as well as precursor chemicals from China, into the U.S. borders.

Trump had earlier warned of a 10% tariff on Chinese imports due to trade issues, but adjusted that in line with the Feb. 1 deadline.

China expressed its readiness to engage in dialogue with the U.S. to “effectively manage differences and enhance mutually beneficial collaboration.” The foreign ministry stated that it aimed to foster stable and sustainable relations with the U.S. White House trade adviser Peter Navarro informed CNBC on Tuesday morning that Trump’s tariff threats against Canada and Mexico were intended to urge both nations to prevent illegal migrants and drugs from entering the U.S.

On Monday, Trump signed an extensive trade memorandum, instructing federal agencies to conduct thorough evaluations of various trade matters by April 1.

This encompasses examinations of ongoing U.S. trade deficits, unjust trade actions, and currency manipulation among partner nations, such as China. Trump’s memo sought suggestions for solutions, such as a “global supplemental tariff,” and modifications to the $800 de minimis duty-free exemption for low-value shipments, frequently attributed to the illegal importation of fentanyl precursor chemicals.

The ordered reviews provide some space to settle reported conflicts among Trump’s cabinet nominees regarding his pledges of universal tariffs and duties on Chinese products of up to 60%. Trump’s more calculated stance on tariffs sparked a surge in U.S. stocks, driving the benchmark S&P 500 index (.SPX) to its peak in a month, yet Trump’s recent comments about China and the European Union could dampen that upward trend.

Trump probably “chose to proceed more cautiously and ensure he has as solid a legal basis as possible for these types of actions,” stated William Reinsch, a trade specialist at the Center for Strategic and International Studies in Washington. “He’s determining how to effectively utilize his advantage to achieve his goals.”

Mexico and Canada struck conciliatory tones in response to Trump’s Feb. 1 deadline. Mexican President Claudia Sheinbaum said that she would emphasize Mexico’s sovereignty and independence and would respond to U.S. actions “step by step”.

But she added that the U.S.-Mexico-Canada free trade agreement was not up for renegotiation until 2026, a comment aimed at pre-empting suggestions that Trump will seek an early revamp of the pact that underpins more than $1.8 trillion in annual three-way trade.

Corn farmers are worried about U.S. tariffs and retaliatory duties disrupting trade with Mexico, their top export customer for corn, and with Canada, the top export customer for U.S. corn-derived ethanol.

“We understand that he is a negotiating type of person,” Illinois farmer Kenny Hartman Jr, board president of the National Corn Growers Association, said of Trump. “We’re just hoping that we can come out of this where we don’t lose the exports – we don’t lose that corn going to Mexico or that ethanol going to Canada.”