America’s buying and selling companions have largely did not retaliate towards Donald Trump’s sweeping tariffs, permitting a president taunted for “always chickening out” to boost almost $50bn in additional customs revenues at little value.
4 months since Trump fired the opening salvo of his commerce warfare, solely China and Canada have dared to hit again at Washington imposing a minimal 10 per cent world tariff, 50 per cent levies on metal and aluminium, and 25 per cent on autos.
On the similar time US revenues from customs duties hit a document excessive of $64bn within the second quarter — $47bn greater than over the identical interval final yr, in line with information printed by the US Treasury on Friday.
China’s retaliatory tariffs on American imports, probably the most sustained and vital of any nation, haven’t had the identical impact, with total earnings from customized duties only one.9 per cent larger in Might 2025 than the yr earlier than.
Mixed with restricted retaliation from Canada, which has but to launch second-quarter customs information, the duties imposed on American exports worldwide signify a tiny fraction of the US income throughout the identical interval.
Another US buying and selling companions determined towards responding in type whereas negotiating with Trump to keep away from even larger threatened tariffs.
The EU, the world’s largest buying and selling bloc, has deliberate counter-tariffs however has repeatedly deferred implementation, now linking them to Trump’s August 1 deadline for talks.
The price of Trump’s tariffs are additionally not falling solely on American customers, provide chain consultants say, as worldwide manufacturers look to unfold the impression of value will increase across the globe to minimise the impression on the US market.
Simon Geale, govt vice-president at Proxima, a provide chain consultancy owned by Bain & Firm, mentioned main manufacturers corresponding to Apple, Adidas and Mercedes would look to mitigate the impression of worth will increase.
“Global brands can try and swallow some of the tariff cost through smart sourcing and cost savings but the majority will have to be distributed across other markets, because US consumers might swallow a 5 per cent increase, but not 20 or even 40,” Geale mentioned.
However regardless of US tariffs hitting ranges not seen for the reason that Thirties, the timidity of the worldwide response to Trump has forestalled a retaliatory spiral of the sort that decimated world commerce between the primary and second world wars.
Economists mentioned the US’s dominant place because the world’s largest client market, coupled with Trump’s threats to redouble tariffs on states that defy him, meant that for many international locations the choice to “chicken out” was not cowardice, however financial widespread sense.
Modelling by Capital Economics, a consultancy, discovered {that a} high-escalation commerce warfare the place the common reciprocal tariff price reached 24 per cent would trigger a 1.3 per cent hit to world GDP over two years, in contrast with 0.3 per cent in a base case it remained at 10 per cent.
“Unlike the 1930s when countries had more balanced trading relationships, today’s world features a hub-and-spoke system with the US at the centre,” mentioned Marta Bengoa, professor of worldwide economics at Metropolis College of New York. “That makes retaliation economically less desirable for most countries, even when it might be politically satisfying.”
Alexander Klein, professor of financial historical past at Sussex College, added that short-term concerns — decreasing publicity to tariffs and minimising the danger of inflation — had been driving most negotiations with Trump, which gave the White Home the higher hand.
“I’d like to think leaders were learning the lessons of history, but I fear that’s optimistic. More likely, the EU, Canada and many other governments fear the hit to global supply linkages and inflation from escalation,” he mentioned. “Trump cares less about that, so is taking advantage.”
The US’s largest buying and selling associate Mexico didn’t retaliate after being hit with 25 per cent tariffs in March on exports not lined by the US-Mexico-Canada Settlement. From the start of her talks with Trump, President Claudia Sheinbaum mentioned she most well-liked a deal.
The failure of the world to unite and collectively face down Trump’s threats has additionally left the US president extra space to choose off particular person states. He threatened a 50 per cent tariff on Brazil final week, citing largely political justifications.
“Trump has made it clear that he is prepared to raise tariffs further in the face of retaliation,” mentioned Bengoa of Metropolis College of New York. “Many countries learned from the 2018-2019 trade war that retaliation often leads to counter-retaliation rather than negotiated solutions.”
Even inside unified blocs such because the EU, the competing pursuits of particular person member states, mixed with wider fears over whether or not a confrontation with Trump may undermine US safety ensures to Europe, have bred intense warning.
Trump’s determination to threaten to extend tariffs to 30 per cent didn’t provoke a serious response in Brussels, partly as a result of senior US officers, together with Treasury secretary Scott Bessent, reached out behind the scenes to counsel warning, in line with insiders.
An EU official conversant in the talks added that negotiations weren’t going down in isolation, at a time when Europe was searching for continued US backing for Ukraine. “They affect the whole spectrum of US relations including those regarding security,” they mentioned.
Because of this, in contrast to China which matched Trump tariff for tariff in April, the EU has repeatedly delayed implementing its packages of retaliatory measures because it seeks to depart house to chop a take care of Trump forward of August 1.
When the European Fee printed its newest record of potential retaliatory targets on €72bn of products on Tuesday — together with Boeing plane, automobiles and bourbon — it put no particular tariff charges towards particular person merchandise, in an obvious try to not rile Trump additional.
Even Canada and China have been cautious of antagonising Trump regardless of being the one two international locations to impose retaliatory tariffs.
US tariffs on China escalated to 145 per cent by mid-April, inflicting Chinese language exports to the US to plummet by a 3rd in Might. Each side shortly stepped again, agreeing a 90-day pause in Geneva in Might, slicing the speed right down to 30 per cent.
In February and March Canada imposed almost C$155bn in retaliatory tariffs, together with on metal and auto components. In current weeks although it has retreated within the face of US strain regardless of election guarantees by Canadian premier Mark Carney to confront Trump.
With US commerce accounting for 20 per cent of Canadian GDP — in contrast with 2 per cent for the US — Carney has calibrated his responses. He ditched a digital providers tax beneath US strain and didn’t match Trump’s determination final month to double metal tariffs to 50 per cent.
“Carney’s ‘elbows up’ rhetoric worked during the election campaign, but we can’t be confrontational with the US,” mentioned Dan Nowlan, an adviser to former Conservative Canadian premier Stephen Harper. “It’s now a much more realist approach.”
Diplomats say whether or not the world will finally unite to confront Trump will rely partly on the place tariff ranges settle across the August 1 deadline.
Commerce commissioner Maroš Šefčovič mentioned this week {that a} 30 per cent tariff on EU exports would go away the bloc with nothing to lose since transatlantic commerce could be “almost impossible”. He added the EU was speaking with “like-minded” buying and selling companions about potential joint measures.
Long run, the failure to retaliate would additionally give US corporations a comparatively free go into world provide chains whereas EU and Asian producers nonetheless confronted excessive tariffs into the US, mentioned Creon Butler, head of world financial system at Chatham Home.
“The calculation is short term versus long term,” he mentioned. “It makes sense not to retaliate in the short term, but long term, there’s a calculation for other countries over the extent to which we are going to fight for global supply chains outside the US.”
Extra reporting Henry Foy in Brussels and Christine Murray
