Trump Attacks EU in Trade Remarks; Canada and Mexico Respond to 25% Threat

"We're going to make a lot of money from tariffs," he said. He claimed that the European Union levies a value added tax of 20%, "and that's really almost the equivalent of a tariff." (The minimum VAT on most goods is 15%, and there is no maximum; each country sets its own VAT. However, necessities such as medicines and food, and even books and newspapers, do not include a VAT. Exports aren't subject to the VAT, so it can have trade effects.)

Trump said, as he has many times, "They don't take our cars, they don't take our farm products, they don't take anything." He said that the U.S. imports about $300 billion more than it exports to the EU (the correct figure in 2023 for goods trade was almost $162 billion).

"We'll straighten that out with tariffs, or they'll have to buy our oil and gas," Trump said.

Trump also wrongly attacked Spain as belonging to the BRICS alliance during his give-and-take with reporters, and said if BRICS countries try to replace the dollar as the currency used in their international sales, he'll impose "at least 100% tariffs" on them, until they reverse course.

Republicans have traditionally been pro-trade and for lowering U.S. tariffs in trade agreements so that trading partners would lower their barriers to U.S. exports, but some are balancing that long-held view with their need to be aligned with their party's standard-bearer. Sen. Chuck Grassley, R-Iowa, was asked on a phone call with reporters Jan. 21 about another tariff plan Trump discussed the night before -- putting 25% tariffs on Canadian and Mexican goods, starting Feb. 1.

Grassley replied, "Well, I'm a free trader, I voted for the USMCA," which eliminates tariffs on nearly all goods traded between the three countries, as long as rules of origin are met. "On the other hand, I think Trump has a new approach to tariffs, to put 'em on, bring people to the table, get freer trade. I don't know if it's going to work, but I'm not going to bad-mouth Trump in the meantime. I'm going to hope it works."

A reporter asked Grassley if bills introduced in the House and Senate to curtail Trump's power to levy tariffs would have a chance of passage.

"I tried the last time I was chairman of the Finance Committee," he said, reminding the reporters that there were two different approaches to restrict the president's ability to impose Section 232 tariffs and Section 301 tariffs, each with bipartisan sponsors. "I thought I could get people together," he said, but he failed to find a compromise that could get the votes. "I thought there was abuse of the installation of tariffs, and I wanted to recapture some of the legislative power to govern ... foreign commerce. I thought Congress gave away too much" in the 1962 and 1974 laws that the first Trump administration used to hike tariffs on steel, aluminum and on a majority of imports from China. "So I'm pessimistic that any attempt this time would be successful," he said.

Canadian politicians are speaking out against Trump's tariff plan against their goods. The Wall Street Journal reported that Prime Minister Justin Trudeau said that Canada's "response will be robust, and rapid, and measured, and very strong" if the U.S. imposes tariffs on its exports.

“Trump is, as always, a skilled negotiator and will do what he can to keep his negotiating partners a little bit off balance,” Trudeau said in Canada, the paper reported. “President Trump said that he wants to usher in a golden age for the United States. That will require more steel and aluminum, more critical minerals, more reliable and affordable energy, more of every resource to run the U.S. economy full steam ahead,” Trudeau said. “Canada has all those resources, and we stand at the ready to work with the United States.”

The newspaper also ran a column from Ontario Premier Doug Ford, which said Canada is a needed ally as the U.S. decouples from China, since it has "an abundant supply of critical minerals, oil and gas and nuclear energy," and Canadian and U.S. supply chains are highly integrated in strategic sectors.

"For Fortress Am-Can to succeed, Canada and the U.S. must remain united and focused on the threats that risk undermining our success. A costly trade and tariff war between the U.S. and Canada would benefit only China and Chinese-backed companies by creating economic uncertainty," he wrote.

"Mexico also must step up. That country has become a backdoor for cheap Chinese parts and products to enter the U.S. and Canada, undercutting American and Canadian workers and manufacturers. If Mexico doesn’t put a stop to Chinese transshipment, it should lose its seat at the table by being left out of trade agreements," he added.

Mexican President Claudia Sheinbaum didn't criticize Trump in her morning news conference Jan. 21, but said business interests shouldn't panic, because the signed orders don't include the tariffs, and those are what have the force of law.

Trump's threats against China were more muted than those against Canada and Mexico. He said he wasn't planning to impose 60% tariffs on Chinese goods, as he said he would on the campaign trail, and he didn't even sound sure he'd enact the 10% tariff he threatened over fentanyl. That 10% was mentioned at the same time he first threatened to impose 25% tariffs on Mexico and Canada over migration and fentanyl smuggling.

However, Trump said that if he wasn't satisfied with China's cooperation in releasing control of TikTok, he could impose tariffs to get them to agree, saying that tariffs of 20%, 30%, 40%, 50% or even 100% would ensure that they change their positions on the sale of the app.

"I'm not saying I would, but you could totally do that," he added.