Donald Trump last night admitted Americans may feel ‘pain’ due to his global trade war, after Canada, Mexico and China retaliated.
But he defended his decision to impose sweeping tariffs on the US’s three biggest trading partners, which come into effect tomorrow.
The US president argued that the impacts of his executive order are ‘worth the price’ to protect Americans from drug trafficking and illegal immigration – two key promises on which he was elected last year.
He also threatened to slap the European Union with the same taxes, and repeated his call for Canada to ‘become our cherished 51st state’.
But Home Secretary Yvette Cooper warned the tariffs could have a ‘really damaging impact’ on the global economy, as Prime Minister Sir Keir Starmer revealed he wanted the UK to have a ‘strong trading relationship’ with the US.
The diplomatic row came as Canada and Mexico ordered stiff counter-tariffs on their North American neighbour after both being hit with a 25 per cent taxes on imports, although Canadian energy faces a 10 per cent tax.
Shortly after Mr Trump signed his executive order on Saturday, Justin Trudeau replied with ‘far-reaching’ tariffs of 25 per cent affecting up to $155billion (£125billion) of American goods, ranging from fruit and alcohol.
‘The actions taken today by the White House split us apart instead of bringing us together,’ Mr Trudeau said at a press conference in Ottawa.
Former Bank of England governor Mark Carney, who is running to be the new leader of Mr Trudeau’s Liberal Party and thus PM, added to the frustrations by calling Mr Trump a ‘bully’.
Meanwhile, Mexican president Claudia Sheinbaum – who has instructed retaliatory tariffs and other undisclosed measures – described accusations by the White House that Mexico has ‘an intolerable alliance’ with drug cartels as ‘slander’.
And China – which has had an additional 10 per cent tax on goods placed on them – promised ‘corresponding countermeasures’ and said it would file a lawsuit with the World Trade Organization for the ‘serious violation’ in international law.
The European Commision vowed to ‘respond firmly to any trading partner that unfairly or arbitrarily imposes tariffs on EU goods’.
During his election campaign trail last year, Mr Trump promised tariffs on all imports from 10 to 20 per cent, with a special rate of 60 per cent on all imports from China.
Despite Canada, Mexico and China accounting for more than 40 per cent of imports into the US last year, the Trump administration believes his protectionist strategy will stop the spread of the deadly opioid fentanyl and push Mexico into dealing with the migrant crisis.
However, analysis by Yale University estimated that the average US household would lose the equivalent of $1,170 (£944) in income from the tariffs, with growth worsening and investors bracing for stock market falls.
Financial services firm IG predicting the US’s Nasdaq index is on track to fall 1.2 per cent at the start of trading today (MON), and the UK’s FTSE 100 – which ended last week at a record high – was on track for a 0.6 per cent drop.
Jordan Rochester, of Japanese bank Mizuho, predicted ‘sizeable moves’ with the dollar reaching parity with the euro by March and hikes in borrowing costs from the threat of rising inflation.
In response to a Wall Street Journal editorial calling his tariffs ‘the dumbest trade war in history’, Mr Trump posted on his Truth Social platform: ‘This will be the golden age of America! Will there be some pain? Yes, maybe (and maybe not!). But we will make America reat again, and it will all be worth the price that must be paid.’
Speaking to the BBC’s Sunday with Laura Kuenssberg, Ms Cooper said: ‘Tariff increases really right across the world can have a really damaging impact on global growth and trade, so I don’t think it’s what anybody wants to see.’
On LBC radio, Ms Cooper refused to say whether Prime Minister Sir Keir would retaliate if Mr Trump imposed tariffs on the UK.
‘The Government will always act in the interests of this country and the interests of Britain and the interests of Britain’s business,’ she said.
Sir Keir Starmer avoided weighing into the trade war as he welcomed German Chancellor Olaf Scholz to Chequers.
‘It is early days. What I want to see is strong trading relations,’ he told reporters.
‘In the discussions that I have had with President Trump, that is what we have centred on, a strong trading relationship. So it is very early days.’
Tory business spokesman Andrew Griffith suggested Brexit means the UK could agree a trade deal with the US that would see it avoid tariffs.
‘If we play our cards right my view is the UK can do what it’s always done, prosper on the back of trading relationships around the world,’ he said.