MW Trump is now trying to block Canada's efforts to boost Europe ties

By Jamie Chisholm

Trump threatens 'large scale tariffs' against Canada and EU if they ally in trade war

U.S. President Donald Trump threatened to levy additional tariffs on Canada and the European Union if they worked together in response to his trade war.

In an early-hours post on Truth Social, Trump said: "If the European Union works with Canada in order to do economic harm to the USA, large scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!"

The message came hours after Trump slapped 25% tariffs on car imports into the U.S., a move that would hit European, Japanese and South Korean companies in particular - though many do have plants inside the U.S.

Mexico provides the greatest volume of auto imports into the U.S.

The U.S.'s trading partners also face a batch of what Trump calls reciprocal tariffs on April 2, a date the president has dubbed "Liberation Day."

Trump's post comes several days after the new Canadian prime minister, Mark Carney, said it was important for Ottawa to strengthen ties with "reliable partners" in Europe amid the escalating trade tensions and after his U.S. counterpart repeatedly suggested Canada should become a U.S. state.

He also said this month that Canada should look at alternatives to buying U.S. fighter jets. The Gripen, built by Sweden's Saab (SE:SAAB.B), could be a partial replacement for the F-35 made by Lockheed Martin $(LMT)$.

Reacting to the 25% car tariffs, Carney said they were a "direct attack" on Canadian workers and retaliatory measures were being considered.

The U.S. dollar was rising against the Canadian dollar $(USDCAD.FOREX)$ on Thursday morning, but not by much, as it gained 0.2%.

In a note analyzing positioning in stock-market and currency futures, JPMorgan analyst Nikolaos Panigirtzoglou said investors this year are looking for a "benign" outcome in terms of Canadian and Mexican tariffs.

As for Europe, European Commission President Ursula von der Leyen described the move as "bad for businesses, worse for consumers."

Shares of leading European automakers - BMW (XE:BMW), Porsche (XE:P911), Mercedes-Benz (XE:MBG) and Volkswagen (XE:VOW3)- each fell between 4% and 5% in early Frankfurt trade.

Hyundai Motor (KR:005380) shares closed 4% lower in Seoul as Toyota Motor (JP:7203) fell 2% in Tokyo trade.

-Jamie Chisholm

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March 27, 2025 04:29 ET (08:29 GMT)

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