World War Tariff: Trump’s Trade Offensive Engulfs EU and India – Who’s Next?

The world is witnessing an unprecedented escalation in trade hostilities as US President Donald Trump entrenches his aggressive tariff policies, targeting key economic partners. Fresh from imposing a 15% blanket tariff on most EU exports, the Trump administration has now turned its sights on India, slapping a 25% levy on its goods. With the EU reluctantly acquiescing to a lopsided trade deal and India facing punitive measures, the question looms: who will be next in Trump’s tariff crosshairs?

This unfolding economic conflict, dubbed by some as "World War Tariff," threatens to destabilise global supply chains, inflate consumer prices, and reshape international trade alliances. As tensions rise, businesses scramble to adapt while political leaders brace for further disruptions.

The EU Capitulates: A One-Sided Trade Deal

In a move that has left European leaders seething, President Trump and European Commission President Ursula von der Leyen brokered a deal over the weekend, averting an all-out trade war—but at a steep cost for the EU.

Key Terms of the US-EU Trade Agreement

- 15% Flat Tariff on Most EU Exports: Covering automobiles, semiconductors, pharmaceuticals, and other critical sectors, this levy replaces previous variable tariffs, which were typically in single digits.
- Energy Dependence on the US: The EU has committed to purchasing 750 billion worth of US energy exports (including LNG, oil, and nuclear fuel) over three years —a staggering increase from the current 80 billion annual trade volume.
- Limited "Zero-for-Zero" Exemptions: A handful of industries, including aircraft components, certain chemicals, and semiconductor equipment, will escape tariffs, but the majority remain exposed.

European Backlash: "A Dark Day for Europe"

French Prime Minister François Bayrou condemned the agreement as a surrender, declaring:

"It is a dark day when an alliance of free peoples, united to affirm their values and defend their interests, resolves to submission."

German EU Parliamentarian Bernd Lange echoed the sentiment, calling the deal "lopsided" and "difficult to accept." Despite the discontent, some leaders, like Danish Foreign Minister Lars Løkke Rasmussen, begrudgingly acknowledged the necessity of compromise.

The Lingering Steel and Aluminum Question

Notably absent from the deal was clarity on the 50% US tariffs on EU steel and aluminum. While von der Leyen hinted at future negotiations, no concrete resolution has been reached, leaving European manufacturers in limbo.

India in the Crosshairs: A 25% Tariff and Russia Tensions

Just as the EU deal was being finalised, Trump pivoted to India, announcing a 25% tariff on Indian goods, effective 1 August 2025. The decision, communicated via Truth Social, cited two key grievances:

- India’s High Tariffs on US Goods: Trump accused India of maintaining "the most strenuous and obnoxious non-monetary trade barriers."
- Trade with Russia: The US President lambasted India for being "Russia’s largest buyer of energy" and a major importer of Russian military hardware, arguing this indirectly fuels the Ukraine conflict.

Smartphone Industry Shaken

The timing could not be worse for the tech sector. Recent data from Canalys reveals that 44% of US smartphone imports now come from India, up from just 13% a year ago, as manufacturers shift production away from China.

Runar Bjørhovde, a Canalys analyst, noted:

"Tariffs or no, India is still a better bet for Apple than China."

However, with Vietnam emerging as an alternative, companies may yet reconsider their supply chains.

The Russia Factor: A Political Gamble

Trump’s linkage of tariffs to India’s Russia ties suggests a broader geopolitical strategy. Bjørhovde speculated:

"Trump is struggling to put pressure on Russia. He’s hoping India might be able to push on Russia too."

If India refuses to comply, an additional, unspecified penalty looms—raising the stakes further.

Who’s Next in Trump’s Trade War?

With the EU subdued and India now under fire, speculation mounts over the next target. Possible candidates include:

1. Vietnam: Already a growing manufacturing hub, Vietnam could face scrutiny if Trump perceives its trade surplus as a threat.
2. Mexico: Despite the USMCA agreement, Trump has previously threatened auto tariffs on Mexico—could they return?
3. South Korea: A major exporter of electronics and automobiles, South Korea may find itself in Trump’s crosshairs if trade imbalances persist.
4. Brazil: As a key agricultural exporter, Brazil could be pressured to reduce barriers to US goods.

A New Era of Economic Warfare

Trump’s "World War Tariff" strategy is reshaping global commerce, forcing nations to choose between economic pain and political concessions. The EU’s reluctant deal and India’s sudden inclusion in the tariff regime signal that no major trading partner is safe.

As businesses brace for volatility and consumers face rising costs, one thing is clear: the age of free trade is under siege, and the battle has only just begun.

Will the next target be Vietnam? Mexico? Or another unsuspecting economy? Only time—and Trump’s next Truth Social post—will tell.

India | Economy, Business, Trade | |