FRANKFURT, Germany — Sweeping new tariffs announced by U.S. President Donald Trump provoked dismay, threats of countermeasures and calls for talks to find ways to rescind the stiff new import taxes imposed on goods from countries around the globe.
But responses Thursday were measured, highlighting a lack of appetite for an outright trade war with the world's biggest economy.
Trump said Wednesday the import taxes, ranging from 10% to 49%, would do to U.S. trading partners what they have long done to the U.S. He claims they will draw factories and jobs back to the United States.
Trump's announcement of a new 20% tariff on the European Union drew a sharp rebuke from European Commission President Ursula von der Leyen, who said it was a "major blow to the world economy."
European Commission President Ursula von der Leyen addresses the media March 20 at the end of an EU summit in Brussels.
"The consequences will be dire for millions of people around the globe," von der Leyen said. Groceries, transport and medicines will cost more, she said while visiting Uzbekistan. "And this is hurting, in particular, the most vulnerable citizens."
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Von der Leyen held off, however, from announcing new retaliatory measures and underlined that the EU was ready to negotiate with the U.S.
The makers of Italy's Parmigiano Reggiano cheese say the new tariffs just mean U.S. consumers will pay more, since the protected designation cheese doesn't really compete with U.S. made parmesan.
"Americans continued to choose us even when the price went up" after an earlier round of Trump tariffs in 2019, said Nicola Bertinelli, president of the Parmigian Reggiano Consortium.
"Putting tariffs on a product like ours, only increases the price for American consumers, without protecting local producers,'' he said.
A display shows falling share prices Thursday in Frankfurt, Germany, in the wake of the tariff package announced by U.S. President Donald Trump.
Analysts say there's little to be gained from an all-out trade war, for the United States or other countries, since higher tariffs can lower growth and raise inflation.
"If Trump really imposes high tariffs, Europe will have to respond, but the paradox is that the EU would be better off doing nothing," said Matteo Villa, a senior analyst at Italy's Institute for International Political Studies. "On the other hand, Trump seems to understand only the language of force, and this indicates the need for a strong and immediate response."
President Donald Trump departs Wednesday after signing an executive order at an event to announce new tariffs in the Rose Garden of the White House in Washington.
Tech companies
Europe's strategy so far has been to limit retaliation to early tariff rounds to just a few politically sensitive goods such as bourbon and motorcycles in an attempt to push the U.S. to the negotiating table, rather than escalate an all-out trade war that could cripple its export-dependent economy.
Economists say the next target could be U.S. tech companies. They fall into the services category, where the U.S. exports more than it imports to Europe and thus would be more exposed to retaliation.
The EU response, likely to be ready by the end of April, includes the option of a tax on U.S. digital giants, said French government spokesperson Sophie Primas.
"We're going to target the services, for example, digital services which are not being taxed for now and could be, the GAFAM for example," she said on French radio RTL. That's a colloquial acronym for Google, Apple, Facebook, Amazon and Microsoft.
People walk past an electronic stock board showing the day's early loss of Japan's Nikkei 225 index Thursday at a securities firm in Tokyo.
Outgoing German Chancellor Olaf Scholz said the EU won't be able to limit itself to saying the tariffs are damaging — "we must show that we have strong muscles."
He added: "But this is with the aim of an agreement, because that is the best for prosperity in the U.S., for prosperity in Europe and for prosperity in the world."
British Prime Minister Kier Starmer said the U.K. government would react with "cool and calm heads," telling business leaders in London that he hopes to get the tariffs lifted with a trade deal. "Nobody wins in a trade war, that is not in our national interest," Starmer said.
Japan, America's closest ally in Asia, plans to closely analyze the U.S. tariffs and their impact, Chief Cabinet Secretary Yoshimasa Hayashi said, while refraining from talk of retaliation.
'Blow to the world economy'
Financial markets were jolted, with U.S. stock futures down by as much as 3% early Thursday and a 2.8% drop in Tokyo's benchmark leading losses in Asia. Oil prices sank more than $2 a barrel. Analysts fished for superlatives to a step that disrupts the global trading order and overturns decades of efforts to lower tariffs through trade talks and free trade agreements.
"The magnitude of the rollout — both in scale and speed — wasn't just aggressive; it was a full-throttle macro disruption," Stephen Innes of SPI Asset Management said in a commentary. Deutsche Bank's Jim Reid called it "radical policy reordering" and said the U.S. now had an average tariff of 25%-30%, the "worst end of expectations" and the highest since the early 20th Century.
Containers are stacked Wednesday at the Port of Los Angeles.
Asian countries that are among the biggest exporters to the U.S. pledged to act fast to support automakers and other businesses likely to be affected.
South Korean Prime Minister Han Duck-soo told officials to work with business groups to analyze the impact of the new 25% tariff to "minimize damage," the trade ministry said.
China's Commerce Ministry said Beijing would "resolutely take countermeasures to safeguard its own rights and interests," without saying exactly what it might do.
Mexican President Claudia Sheinbaum said she would wait to see how Trump's announcement will affect Mexico, which like Canada was spared for goods already qualified under their free trade agreement with the United States, though previously announced 25% tariffs on auto imports took effect Thursday.
A 29% tariff imposed on the tiny South Pacific outpost of Norfolk Island came as a surprise. The Australian territory has a population of about 2,000 people and the economy revolves around tourism.
"To my knowledge, we do not export anything to the United States," Norfolk Island Administrator George Plant, the Australian government's representative on the island, said Thursday. "We don't charge tariffs on anything. I can't think of any non-tariff barriers that would be in place either, so we're scratching our heads here."
Tariff whiplash and HUD cuts could cripple affordable housing development
Tariff whiplash and HUD cuts could cripple affordable housing development
President Donald Trump's sweeping tariffs on foreign goods have affordable housing developers staring down the barrel of a gun. Not only have existing tariffs on steel, aluminum, lumber, home appliances, and other construction materials prompted fears of a recession, but threats of new tariffs have made an already-hurting housing market much more uncertain to navigate.
For the past decade, Monica Martinez has led the Fax Partnership in Denver, a community development nonprofit that builds affordable housing along the rapidly gentrifying East Colfax corridor.
The Fax currently owns 40 motel units that have been converted into shelter options for people experiencing homelessness. The nonprofit plans to redevelop the property into affordable housing once a billboard lease expires in 2028. Martinez says the organization is also working on a proforma for a 110-unit workforce housing development in the neighborhood.
But finalizing those plans has become increasingly difficult because of the uncertainty caused by Trump's tariffs and extreme cuts to the Department of Housing and Urban Development.
"The challenges to make these deals economically viable are already numerous, including construction and labor costs, in addition to permitting and the escalating cost of insurance," Martinez tells . "As a result, many units will not be built despite the acute need for units."
For instance, nonprofit developers like The Fax need to apply for state and federal tax credits to financially support building affordable housing. Those tax credits have become more important as the cost of labor and materials have increased in recent years. However, the amount of uncertainty created by the tariffs and HUD cuts has jeopardized many affordable housing deals.
"There are very little margins to make these deals pencil, despite the great demand for affordable units," Martinez says. "Increased costs to wood could result in deals not being viable, resulting in reduced affordable housing development."
The Fax Partnership's struggles illustrate how the uncertainty created by Trump's whiplash over tariffs and the cuts to HUD are impacting affordable housing. While almost no part of the U.S. economy has been spared from the uncertainty, experts like Martinez are concerned that Trump's actions could upend the progress made to address America's affordable housing crisis.
The federal government has played an important part in developing affordable housing for decades. Not only does it provide grants and loans for subsidized affordable housing, the government also has multiple programs to preserve and maintain affordable units.
Depending on who you ask, the U.S. faces a shortage of between 4 million and 7 million affordable homes. Addressing this gap was one of the key policy concerns for former president Joe Biden's administration. Under Biden, HUD in 1,200 communities to build more affordable housing, preserved more than 30,000 affordable units through the Green and Resilient Retrofit Program, and allocated more than $100 billion in rental assistance to 2,100 public housing agencies.
However, the Trump administration is reversing course. The administration has proposed gutting HUD's staff by 50% with deep cuts to the offices that oversee the Housing Choice Voucher program and enforce fair housing laws. Trump has also threatened to impose tariffs on trading partners like Canada and Mexico, which supply important homebuilding materials like steel, wood and aluminum.
Tariff damages
Trump imposed and an additional 10% tariff on raw materials from China on March 3. He delayed those tariffs until April 2 after the markets soured. A week later, Trump on steel and aluminum imports from Canada and Europe to 25%, a move that caused both countries to place reciprocal tariffs on goods exported from America.
Already, the National Association of Home Builders says some of its members have estimated that the tariffs on building materials could .
While the financial impact of the tariffs has yet to be felt by American consumers, they have created a lot of uncertainty among investors. Metropolitan State University economist Alexandre Padilla tells Next City that uncertainty is the most damaging aspect of the tariff whiplash.
"In essence, these trade agreements are not being supported, and the investors are just going to pull their money away," Padilla says. "And that's what we observed in the market."
Trump has consistently defended the tariffs as a way to protect American industries. But Padilla says the way Trump has described the tariffs is not accurate.
Padilla says it is a good thing that countries can import goods like lumber, aluminum and steel into the U.S. at a lower cost than they can be produced domestically. Those lower costs benefit both businesses and consumers, he adds.
"We should embrace the fact that some countries subsidize the production of sales and sell us lumber and all those things necessary to build housing at a lower price," Padilla says.
Outside of the cost of materials, Trump's tariffs have also created uncertainty among U.S. trade partners. The U.S. imports roughly 30% of the wood used in residential and commercial construction from Canada. Mexico supplies about 71% of all gypsum imports, a material that is used to make drywall. Placing additional tariffs on these materials could increase construction costs for new homes by between $17,000 and $22,000 over the next year, according to a
"These haphazard executive actions will cause serious economic impacts and injuries that will undermine our already fragile housing market," Nikitra Bailey, executive vice president of the National Fair Housing Alliance, during a hearing on March 4.
Affordable housing crunch
The cuts to HUD also threaten the amount of financing available for affordable housing developments. For instance, HUD has paused more than $1 billion in grants under the Green and Resilient Retrofit Program and canceled nonprofit capacity-building grants—also known as Section 4 grants—for several prominent housing developers, including Enterprise Community Partners and Local Initiatives Support Corp.
GRRP grants were designed to help affordable housing providers upgrade their properties with green energy technology. Section 4 grants support the building of affordable homes in rural and Tribal communities as well as senior housing and child care centers. Approximately $60 million in Section 4 funding was taken off the table because of the move.
Over the past decade, Enterprise has deployed Section 4 grants in about 700 communities, resulting in the construction or preservation of 45,000 affordable homes.
In California alone, cutting Section 4 and other funding sources could disrupt that are waiting on final approvals, according to Enterprise.
Enterprise CEO Shaun Donovan that the decision will "raise costs for families, hobble the creation of affordable homes, sacrifice local jobs, and sap opportunity from thousands of communities in all 50 states."
Several housing organizations to Congressional leaders describing the devastating impact the HUD staff cuts will have on affordable housing.
"Rather than improving efficiency, such drastic staffing cuts at HUD will cause significant, harmful, and costly delays and will worsen America's affordable housing and homelessness crisis, as well as its significant disaster recovery needs," the letter reads in part.
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