Trump said his tariffs on the three largest U.S. trading partners, which take effect on Tuesday, might cause Americans some short-term pain, but “long term, the United States has been ripped off by virtually every country in the world”.

Global stock markets and currencies tumbled over concerns that the tariffs would trigger an economically damaging trade war. Futures for Wall Street’s S&P 500 fell more than 1.7 per cent before the opening bell, on the heels of the year’s biggest daily losses on a string of Asian and European bourses.

Speaking in Washington on Sunday after returning from his Mar-a-Lago estate, Trump indicated that the 27-nation European Union would be next in the firing line, but did not say when.

“They don’t take our cars, they don’t take our farm products. They take almost nothing and we take everything from them,” he told reporters.

EU leaders meeting at an informal summit in Brussels on Monday said Europe would be prepared to fight back if the U.S. imposes tariffs, but also called for reason and negotiation.

Arriving at the talks, French President Emmanuel Macron said if the EU were attacked in its commercial interests it would have to “make itself respected and thus react”.

Chancellor Olaf Scholz of Germany said the bloc could respond if necessary with its own tariffs against the U.S., but stressed it was better for the two to find agreement on trade.

Trump hinted that Britain, which left the EU in 2020, might be spared tariffs, saying: “I think that one can be worked out”.

The U.S. is the EU’s largest trade and investment partner. According to the Eurostat data from 2023, the United States had a deficit of 155.8 billion euros ($161.6 billion) with the EU in the trade of goods, offset by a surplus of 104 billion euros in services.

EU foreign policy chief Kaja Kallas said there were no winners in a trade war, and if one broke out between Europe and the United States, “then the one laughing on the side is China”.

TUESDAY DEADLINE

The tariffs on Canada, Mexico and China, outlined in three executive orders, are due to take effect 12:01 a.m. EST  on Tuesday.

Trump said he would speak on Monday with the leaders of Canada and Mexico, which have both announced retaliatory tariffs of their own, but downplayed expectations that they would change his mind.

“They owe us a lot of money, and I’m sure they’re going to pay,” Trump told reporters.

White House National Economic Council Director Kevin Hassett suggested Washington was more satisfied with Mexico’s response so far than Canada’s. He told CNBC that Mexico appeared to be “very, very serious about doing what President Trump said,” but the “Canadians appear to have misunderstood the plain language of the executive order”.

Economists said the Republican president’s plan to impose 25 per cent tariffs on Canada and Mexico and 10 per cent tariffs on China would slow global growth and drive prices higher for Americans.

Trump says they are needed to curb immigration and narcotics trafficking and spur domestic industries.

Financial market reaction on Monday reflected concerns about the fallout from a trade war. Shares in Tokyo ended the day down almost three per cent and Australia’s benchmark — often a proxy trade for Chinese markets — dropped 1.8 per cent. The mainland China market was shut for Lunar New Year holidays.

Around lunchtime in Europe, Germany’s DAX index was down two per cent, France’s CAC down 1.9 per cent and Britain’s FTSE 100 down 1.3 per cent.

The Chinese yuan, Canadian dollar and Mexican peso all slumped against a soaring dollar. With Canada and Mexico the top sources of U.S. crude oil imports, U.S. oil prices jumped more than one per cent, while gasoline futures rose nearly three per cent.

Trump’s tariffs will cover almost half of all U.S. imports and would require the United States to more than double its own manufacturing output to cover the gap — an unfeasible task in the near term, ING analysts wrote.

Other analysts said the tariffs could throw Canada and Mexico into recession and trigger “stagflation” — high inflation, stagnant growth and elevated unemployment — at home.

In Europe, economists at Deutsche Bank said they were currently factoring in a 0.5 per cent hit to gross domestic product (GDP) should Trump impose 10 per cent tariffs on the bloc.

NATIONAL EMERGENCY

A White House fact sheet gave no details on what Canada, Mexico and China would need to do to win a reprieve.

Trump vowed to keep the sanctions in place until what he described as a national emergency over fentanyl, a deadly opioid, and illegal immigration to the U.S. ends.

China called fentanyl America’s problem and said it would challenge the tariffs at the World Trade Organization and take other countermeasures, but also left the door open for talks.

Mexican President Claudia Sheinbaum vowed resilience and said she would provide more details on Monday of the retaliatory tariffs she ordered on the weekend. Canada said it would take legal action under the relevant international bodies to challenge the tariffs.

Automakers would be particularly hard hit, with new tariffs on vehicles built in Canada and Mexico, burdening a vast regional supply chain where parts can cross borders several times before final assembly.

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The case was brought by Greenpeace, which said the government was not doing enough to lower illegally high levels of nitrogen oxide emissions caused by intensive farming and heavy use of fertilizers, as well as traffic and construction in the densely-populated Netherlands.

The court in The Hague said the government had clearly failed to comply with European regulations to preserve vulnerable nature reserves and cut excessive emissions of nitrogen oxides and ammonia, which hurt biodiversity and damage the quality of water.

It ordered the government to meet its target of reducing the emissions to legally allowed levels in 50 per cent of all affected nature reserves by 2030, and ruled that it should be fined 10 million euros (C$15 million) if the goal was not met – a sum unlikely on its own to provide a major impetus for change.

Agriculture minister Femke Wiersma said she was disappointed by the court ruling and was considering an appeal.

“We take the nitrogen problem very seriously,” she said in a post on X. “But we can’t ask the impossible of people and companies.”

The problem is seen as a potential stumbling block for the already fragile government coalition, which includes far right leader Geert Wilders’ Freedom Party and a farmers party that was created to protest against nitrogen measures.

The nitrogen problem has plagued the Netherlands for years following rulings in 2018 by the European Court of Justice and in 2019 by the Netherlands’ Council of State that Dutch policies were failing to address it.

Efforts to reduce emissions by buying out livestock farmers triggered large protests, while courts have routinely blocked major construction projects until the problem is solved.

The country’s previous government in 2022 laid out targets for reducing nitrogen pollution in some areas by up to 70 per cent by 2030, but policies to reach that goal have largely been scrapped by the current government as farmers argued they were poorly conceived and unfair.

“Measures were already largely insufficient to reach the 2030 goal and there is no improvement in sight,” the court said, adding that the government’s lack of action was unlawful.

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Methane has a much larger effect on global warming than carbon dioxide (CO2) and reducing methane emissions could buy time to confront the much bigger challenge of cutting the amount of CO2 released into the atmosphere.

“We see a lot of demand already, from food producers and farmers,” DSM’s Clean Cow program director Mark van Nieuwland told Reuters in an interview, even though the launch of the additive, Bovaer, is still more than a year away.

“Large (food) companies have clear climate targets, and they need farms to change to meet those. Also consumers are increasing pressure on farmers and many farmers themselves want to limit emissions.”

Swiss food firm Nestle this month said it wanted to reduce greenhouse gas emissions to zero by 2050, while French dairy maker Danone has said it wants to halve its CO2 emissions by 2030.

Cows constantly burp up methane but DSM says including Bovaer in a cow’s diet could cut these emissions by at least 30 per cent.

“Giving this to only three cows will have the same effect as taking one car off the road,” Van Nieuwland said.

DSM expects to launch Bovaer in Europe either late next year or in early 2021. It is currently waiting for authorization from the European Union to label it as an environmentally beneficial product.

The company estimates that Bovaer has a potential global market value of one to two billion euros (C$1.5 billion to $2.9 billion) and aims to expand into other markets soon after the European launch.

DSM has made a profitable switch from bulk chemicals to sustainable food ingredients and materials, growing sales of animal feed products to around 30 per cent of its nine billion euros in total sales last year.

“We have to deal with methane in the next five to 10 years if we want to limit the rise in temperatures to 1.5 degrees,” Van Nieuwland said.

Bovaer cuts methane emissions when mixed into a cow’s feed by inhibiting an enzyme in the digestion process which normally causes the release of the gas.

After 10 years of research the Dutch company says it has dozens of global peer-reviewed studies backing its claims and showing no effect on the health of cows or the milk they deliver.

DSM on Monday said it had teamed up with Dutch scientists and animal feed producers to measure the effects of Bovaer in different dosages and different diets.

The trial will run from November until February 2020, and the results are expected to be applicable throughout Europe, DSM said.

“This can have a real impact and we want to make it as big as possible,” Van Nieuwland said. “The faster we move, the better.”

— Reporting for Reuters by Bart Meijer.

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