U.S. tariff conflict prompts allies to rethink their relationship with Washington
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TroibNews 
The disruptive effects of U.S. tariffs are affecting global markets and beginning to unravel the alliance system that the U.S. has carefully developed over decades.
President Donald Trump's administration has always been skeptical of alliances, but the unpredictable nature of its tariff policies is now putting these relationships to the test. Key allies are increasingly adopting a firmer stance in response.
On Monday, Japanese Prime Minister Shigeru Ishiba indicated a significant change in Japan's strategy regarding ongoing tariff negotiations with the U.S., asserting that Japan would not make substantial concessions nor rush to finalize an agreement. "I'm not of the view that we should make big concessions for the sake of wrapping up negotiations quickly," Ishiba stated in a parliamentary session. This marks Japan's most definitive response to U.S. tariffs, signaling a broader hardening of its position.
Just a week prior, Ishiba had expressed a more conciliatory approach, emphasizing the importance of swift negotiations and even proposing an early phone call with Trump, as well as hopes for a timely visit to the U.S. The quick shift in Japan's stance reveals the increasing pressure between the two countries, particularly as Japan bears the economic impact of U.S. tariffs.
Japan's change aligns with a larger trend among U.S. allies. German Chancellor-designate Friedrich Merz warned on Saturday that the Trump administration's tariff policies are hastening the timeline for the next global financial crisis. While he supported a U.S.-European free trade agreement, Trump rejected the zero-for-zero tariff proposal, stating it was insufficient and suggesting that Europe should mitigate them by purchasing U.S. energy.
In a similar vein, Canadian Prime Minister Mark Carney raised concerns last week, announcing that Canada was implementing retaliatory tariffs against U.S. imports due to "unreasonable" U.S. trade policies. Carney stated that these measures were designed "to cause maximum pain" to the U.S. economy.
Financial analysts are also reevaluating their views. The Financial Times reported that major pension funds in Canada and Denmark are reassessing their U.S. investment approaches, as Trump's erratic tariff policies increasingly suggest instability in the U.S. economy.
A representative from the Canada Pension Plan Investment Board observed that it would be "incredibly difficult" for the board to commit new capital to U.S. private equity funds given the current geopolitical climate.
The strain on alliance systems is evident under the pressure of tariffs.
Ishiba's firm position reflects a growing belief that the Japan-U.S. alliance may no longer provide adequate protection against the economic repercussions of Trump's tariffs. The U.S. has imposed a 25 percent tariff on Japanese automobiles, along with a postponed 24 percent "reciprocal tariff." While the delay offers temporary relief, the total tariff on Japanese car exports to the U.S. has increased from 2.5 percent to 27.5 percent, compromising Japan's competitive position in the American market.
The potential impact on Japan's economy could be significant, as the automobile sector is a crucial part of its economy. Forecasts indicate that the tariffs could lead to a GDP contraction of 0.2 percent to 0.3 percent, affecting over 12 million people employed in automotive-related industries.
Germany, though it exports only 4 percent of its total goods to the U.S., is also experiencing notable economic repercussions. A study by the IAB Institute for Employment Research revealed that a uniform 25 percent tariff increase would decrease Germany's GDP by 1.2 percent one year after implementation. The International Monetary Fund recently adjusted Germany's economic growth forecast for 2025 down to 0.3 percent.
Canada, which sends 76 percent of its total exports to the U.S., is especially at risk. The introduction of tariffs on steel, aluminum, and automobiles, along with new "fentanyl taxes," is anticipated to severely impact multiple industries.
French President Emmanuel Macron has added his voice to calls for caution regarding U.S. investments, underscoring the growing skepticism about the reliability of U.S. economic policies under Trump.
Although the European Union has opted for a restrained response, delaying direct retaliation to U.S. tariffs, EU officials have indicated that relations with Washington will never revert to the pre-Trump norm.
Alejandro Jose Martinez for TROIB News
President Donald Trump's administration has always been skeptical of alliances, but the unpredictable nature of its tariff policies is now putting these relationships to the test. Key allies are increasingly adopting a firmer stance in response.
On Monday, Japanese Prime Minister Shigeru Ishiba indicated a significant change in Japan's strategy regarding ongoing tariff negotiations with the U.S., asserting that Japan would not make substantial concessions nor rush to finalize an agreement. "I'm not of the view that we should make big concessions for the sake of wrapping up negotiations quickly," Ishiba stated in a parliamentary session. This marks Japan's most definitive response to U.S. tariffs, signaling a broader hardening of its position.
Just a week prior, Ishiba had expressed a more conciliatory approach, emphasizing the importance of swift negotiations and even proposing an early phone call with Trump, as well as hopes for a timely visit to the U.S. The quick shift in Japan's stance reveals the increasing pressure between the two countries, particularly as Japan bears the economic impact of U.S. tariffs.
Japan's change aligns with a larger trend among U.S. allies. German Chancellor-designate Friedrich Merz warned on Saturday that the Trump administration's tariff policies are hastening the timeline for the next global financial crisis. While he supported a U.S.-European free trade agreement, Trump rejected the zero-for-zero tariff proposal, stating it was insufficient and suggesting that Europe should mitigate them by purchasing U.S. energy.
In a similar vein, Canadian Prime Minister Mark Carney raised concerns last week, announcing that Canada was implementing retaliatory tariffs against U.S. imports due to "unreasonable" U.S. trade policies. Carney stated that these measures were designed "to cause maximum pain" to the U.S. economy.
Financial analysts are also reevaluating their views. The Financial Times reported that major pension funds in Canada and Denmark are reassessing their U.S. investment approaches, as Trump's erratic tariff policies increasingly suggest instability in the U.S. economy.
A representative from the Canada Pension Plan Investment Board observed that it would be "incredibly difficult" for the board to commit new capital to U.S. private equity funds given the current geopolitical climate.
The strain on alliance systems is evident under the pressure of tariffs.
Ishiba's firm position reflects a growing belief that the Japan-U.S. alliance may no longer provide adequate protection against the economic repercussions of Trump's tariffs. The U.S. has imposed a 25 percent tariff on Japanese automobiles, along with a postponed 24 percent "reciprocal tariff." While the delay offers temporary relief, the total tariff on Japanese car exports to the U.S. has increased from 2.5 percent to 27.5 percent, compromising Japan's competitive position in the American market.
The potential impact on Japan's economy could be significant, as the automobile sector is a crucial part of its economy. Forecasts indicate that the tariffs could lead to a GDP contraction of 0.2 percent to 0.3 percent, affecting over 12 million people employed in automotive-related industries.
Germany, though it exports only 4 percent of its total goods to the U.S., is also experiencing notable economic repercussions. A study by the IAB Institute for Employment Research revealed that a uniform 25 percent tariff increase would decrease Germany's GDP by 1.2 percent one year after implementation. The International Monetary Fund recently adjusted Germany's economic growth forecast for 2025 down to 0.3 percent.
Canada, which sends 76 percent of its total exports to the U.S., is especially at risk. The introduction of tariffs on steel, aluminum, and automobiles, along with new "fentanyl taxes," is anticipated to severely impact multiple industries.
French President Emmanuel Macron has added his voice to calls for caution regarding U.S. investments, underscoring the growing skepticism about the reliability of U.S. economic policies under Trump.
Although the European Union has opted for a restrained response, delaying direct retaliation to U.S. tariffs, EU officials have indicated that relations with Washington will never revert to the pre-Trump norm.
Alejandro Jose Martinez for TROIB News
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