World leaders plan next steps after Trump's new tariffs

The head of the International Monetary Fund, Kristalina Georgieva, said new US tariffs pose "a significant risk to the global outlook" at a time when growth has been sluggish.  

She urged the Trump administration to work constructively with its trade partners to reduce tensions.

"It is important to avoid steps that could further harm the world economy," Georgieva said in a statement released on Thursday.

She added that the IMF would provide its assessment of the announced tariffs when it releases an update to its World Economic Outlook later in April.

US President Donald Trump has offered a rosy economic assessment despite stock markets dropping sharply on Thursday over his tariff annoucement. 

"I think it's going very well," he said as he left the White House to fly to one of his Florida golf clubs.

"The markets are going to boom, the stock is going to boom, the country is going to boom," he said. 

Trump's announcement of tariffs against much of the world jolted global markets. 

Later, speaking with the reporters aboard the presidential plane, Trump said that he'd be open to using tariffs to negotiate with other countries. 

Multiple White House aides have insisted that the new tariffs are not up for negotiation.

But less than an hour before Trump made his comments, his senior trade adviser Peter Navarro told business news outlet CNBC that the tariffs weren't being used to negotiate better trade terms with other countries.

"This is not a negotiation," Navarro said in the CNBC interview. "This is not that. This is a national emergency."

The US stock market plummeted on Thursday after the Trump administration announced a slew of tariffs on almost every country and territory in the world.

The broad-based S&P 500 closed down 4.8% while the Dow Jones was down 4% — the biggest losses for each index since June 2020 when the COVID-19 pandemic crashed the global economy.

The tech-heavy Nasdaq also had its worst trading day since March 2020, having dropped 6%.

The only sector not selling off was consumer staples, which consists of companies that sell basic food stocks.

Harvard University economist Jeffrey Frankel said reaction on Wall Street was "really bad."

"I think the stock market, particularly US stock market, perhaps was overvalued at the beginning of the year. I will say that," Frankel told DW.

"But what our president has has done is really destroy — or at least with regard to US participation if not the global system — the entire rules-based, multilateral open trading system that we've had for the last 80 years, which has given the world, including the US, an historic, unprecedented period of relative peace and prosperity."

He added: "I think he's damaged that very seriously."

Italy's prime minister, Giorgia Meloni, said the trade tariffs announced by US President Donald Trump were a mistake, but their impact should not be overestimated and the response must be carefully considered.

"We must not fuel alarmism, it's not a catastrophe," Meloni said in an interview on Italian state television station RAI.

"I'm not convinced that the best way to respond to tariffs is with other tariffs," she added.

Meloni is one of the few European leaders who is friendly with Trump and his administration.

Lesotho said it would send a government delegation to the United States after it was hit by 50% US tariffs on its imports, the highest for a single country in a package announced by President Donald Trump.

"We need to urgently travel to the US to engage with its executives and plead our case," Trade Minister Mokhethi Shelile told reporters. "My biggest concern was the immediate closure of factories and job losses." 

Lesotho's $2 billion (€1.8 billion) annual gross domestic product is heavily dependent on exports of textiles, including jeans.

"There are 11 factories in the country, most of which export goods to the US and provide employment to 12,000 workers," Shelile said. The minister added that the US move showed the need to "diversify" trade partners and that alternatives are already being explored.

Lesotho is one of the poorest countries in the world, despite its vast mineral resources.

US Commerce Secretary Howard Lutnick said he expects countries to rethink their trade policies following US President Donald Trump's announcement of sweeping new tariffs.

"I expect most countries to start to really examine their trade policy towards the United States of America, and stop picking on us," he said in an interview with US news channel CNBC.

Lutnick did not say whether the United States would lower its tariffs in return. The key question, he said, is whether other countries will treat the US fairly in the future.

"And the answer is, over time, that is going to be yes, American products are going to be better sold elsewhere in the world," he claimed.

In a separate interview with CNN, Lutnick said there is no chance that Trump would back down from his tariffs. 

"The president is not going to back off what he announced yesterday," Lutnick said. "He is not going to back off."

Canadian Prime Minister Mark Carney announced a limited set of countermeasures to US tariffs.

He said the Canadian government will copy the US approach by imposing a 25% tariff on all vehicles imported from the United States that do not comply with the US-Mexico-Canada trade agreement. 

"The 80-year period when the United States embraced the mantle of global economic leadership, when it forged alliances rooted in trust and mutual respect and championed the free and open exchange of goods and services, is over. This is a tragedy," Carney said.

Carney said Canada won't impose tariffs on auto parts, as Trump did, because Canadians know the benefits of an integrated auto sector. Parts can go back and forth across the Canada-US border several times before being fully assembled in the Canadian province Ontario or US state of Michigan.

Automobiles are Canada's second-largest export, and the sector employs 125,000 Canadians directly and almost another 500,000 in related industries. 

"Given the prospective damage to their own people, the American administration should eventually change course. But I don't want to give false hope," Carney said. 

Brazilian President Luiz Inacio Lula da Silva said his country would take "all appropriate measures" to defend itself against tariffs imposed by the United States.

"Faced with the decision of the United States to impose an additional tax on Brazilian products, we will take all appropriate measures to defend our companies and our workers," he said at an event in the capital, Brasilia. "We defend multilateralism and free trade."

Trump on Wednesday announced a 10% tariff on imports from Latin America's largest economy, among a series of levies on trading partners around the world. 

Brazil is the second-largest exporter of steel to the United States after Canada, shipping 4 million tons of the metal in 2024. The country also imports a wide range of steel-based manufactured goods from the United States, including industrial machinery, auto engines and parts for its aerospace industry.

Two senior lawmakers on the Senate Finance Committee have introduced legislation to limit a president's ability to unilaterally impose tariffs. 

Republican Senator Chuck Grassley and Democrat Maria Cantwell introduced legislation that would require the president to notify Congress of new tariffs with a justification, including an analysis of the potential impact on US businesses and consumers.

Congress would have to pass a joint resolution to approve the proposed tariff within 60 days. Otherwise, all new import tariffs would expire.

The bill is modeled after the War Powers Resolution of 1973 and would reestablish limits on the president's ability to unilaterally impose tariffs without congressional approval.

"For too long, Congress has delegated its clear authority to regulate interstate and foreign commerce to the executive branch," Grassley said.

On Wednesday, Trump announced reciprocal tariffs on 185 countries and territories. However, four countries avoided being singled out for special punitive treatment.

Cuba, Belarus, North Korea and Russia are not subject to Trump's new "reciprocal tariffs" because they already face sanctions that "preclude any meaningful trade," the White House said.

White House press secretary Karoline Leavitt told the Axios media outlet that Russia was left out because there was no meaningful trade with it, and Cuba, Belarus and North Korea were not included because existing tariffs and sanctions on them were already so high.

However, trade in goods between Russia and the United States was $3.5 billion (€3.17 billion) last year, according to US figures. In 2021, the year before the Russian full-scale invasion of Ukraine, it was $36 billion.

Ukraine, on the other hand, was hit with punitive tariffs of 10%. In reality, however, the US still imports more goods from Russia than from Ukraine and many other countries that have been hit with new tariffs.

Britain released a 400-page list of US goods that it might include in a possible retaliatory tariff response to President Donald Trump's levies on British imports.

The "indicative long list" of products includes everything from binoculars and bourbon whiskey to car parts and cheese. The list also includes gasoline, diesel and electric cars and food products, including meat and fish.

The government stressed that not all goods on the list would be subject to future tariffs. The list will now be subject to a four-week consultation with businesses.

Britain said it had adopted a "cool-headed" approach to Trump's 10% tariffs, the lowest among the sweeping levies on dozens of other nations.

Business Secretary Jonathan Reynolds said his priority was to reach an agreement with the US but that the consultation was a formal step necessary to allow the government to keep all options on the table.

Volkswagen will introduce an "import fee" on vehicles affected by US President Donald Trump's 25% tariffs, according to media reports.

The German automaker also indicated it would pause rail shipments of vehicles made in Mexico to the United States.

Volkswagen told its dealers that it would provide more details on pricing strategies for tariff-affected cars by mid-April and that it plans to begin allocating vehicles to stores by the end of the month, the media reports said. 

Volkswagen, a 10-brand group that also includes Seat and Skoda, sold just over 1 million vehicles in North America last year, or 12% of its sales by volume.

About 65% of the cars it sells under its namesake brand are shipped to the United States. That figure rises to 100% for its high-end Audi and Porsche brands.

French President Emmanuel Macron said  tariffs announced by President Donald Trump were "brutal and unfounded" and a shock for international trade. He also said Europe must respond "industry by industry."

Speaking during a meeting with French industry representatives, Macron said the response to the reciprocal tariffs would be "more massive" than its earlier retaliation to US steel and aluminum tariffs.

If the Europeans work together in their response to the US tariffs, they will succeed in eliminating the US tariffs, the French president said. He also called for the suspension of French investments in the US until tariffs are clarified.

Macron said the US will be "weaker and poorer" after Trump's tariff announcement, which will also have a "massive impact" on the European economy.

Outgoing German Economy Minister Robert Habeck compared the impact of US President Donald Trump's tariffs on the world economy with that of Russia's full-scale invasion of Ukraine.

"I think this is an extraordinary day for the world economy, comparable to the situation after the Russian aggression against Ukraine. We knew that something new was happening and we in Europe were not prepared to deal with the challenge. And we looked into the abyss that time, but we worked it out," the minister said.

In response to a question from DW, Habeck said Europe had managed to do this by putting aside everything that limited its economic strength and energy security.

"And I think the similar reaction is necessary now from the European Union and its world partners," the minister said, adding that Japan, South Korea and China have agreed to give a unified response to the new US tariffs.

Habeck stressed that the first interest of everyone is not to let the world economy go to pieces. "And this is exactly what Donald Trump announced yesterday. We should not let that happen," the minister said.

DW spoke with Trinh Nguyen, a senior economist at Natixis investment banking firm, about the new US tariffs.

Nguyen noted that "the highest tariff countries are basically very poor countries in Southeast and South Asia."

Nguyen said the United States is trying to impose a trade balance with these countries, which produce a lot of cheap goods that get exported to North America.

However, she noted, that is practically impossible because their economies are just too different from the US. 

"In the immediate term, it's going to be very painful for a lot of Asian countries," she said.

"The big question," she said, is whether semiconductors — a huge economic boon in Asia and key to many US goods — will continue to be exempt or there will be "more sectoral tariffs to come".

"Irrespective, this is a huge hit" to these economies, she said, who will find it difficult to find other markets to export to instead of the US.

"Is this the beginning of the end of globalization as we know it?" Nguyen suggested.