The United States has recently imposed tariffs on key trading partners, and the move is causing a major stir around the world. Canada and Germany are pushing back, and top economists are warning that everyone could feel the impact.
Trade tensions are heating up, and people are worried about a possible global economic slump, messed-up supply chains, and higher prices at the store.
Canada’s Trade Minister, Mary Ng, isn’t holding back. She promised that Canada will do whatever it takes to protect its economy. “Should Canada get tariffs that are punishing, tariffs that will hurt our economy, everything will be on the table,” Ng said in an interview on Monday. “We will respond, and we will respond with impact.”
Even though the latest tariffs between the U.S. and Canada are on hold for now, Canada had earlier announced a massive tariff package worth 155 billion Canadian dollars ($109.3 billion) to strike back against what it called “unjustified” U.S. tariffs.
Over in Europe, Joachim Nagel, President of Germany’s central bank, is sounding the alarm. He warned that these tariffs could create a “self-inflicted economic headwind” that might not only slow down Germany’s economy but also hurt growth in the U.S. and mess up global supply chains. “The erosion of purchasing power and the surge in input costs would far outweigh any potential competitive advantages for U.S. industries,” he said at an event in Frankfurt on Monday.
Nagel pointed out that the U.S. tariffs on steel and aluminum, which are up by 25 percent, could hit Germany hard and threaten its economic outlook. He said that if trade tensions keep rising across the Atlantic, Germany’s economy could be 1.5 percentage points smaller in 2027 than expected. Plus, inflation might go up, although it’s hard to say by how much.
Joseph Stiglitz, an American economist who won the Nobel Prize, is also worried. He thinks the tariffs will probably make things more expensive for consumers and add to the global uncertainty, maybe even leading to stagflation (that’s when inflation is high but the economy isn’t growing). In an interview on Monday, Stiglitz said, “Almost all economists agree that the tariffs will increase prices… the appreciation of the exchange rate won’t be anywhere near enough to compensate for the tariffs.”
He also talked about how U.S. trade policies could have a bigger impact. “I cannot see a really robust economy because I just see the global economy suffering so much from the uncertainty that current policies pose,” he said.
President Donald Trump hinted on Tuesday that more tariffs might be on the way, this time targeting automobile, pharmaceutical, and semiconductor imports. More details are expected in early April.
