Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
Lynn Johannson, President of E2 Management Corporation and Catalyst for THE Collaboration
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Five Ways Countries Are Responding to Trump’s Tariffs
Tariffs | April 3, 2025
Image: Freepik/rawpixel.com
How Countries Are Responding to Trump’s Tariffs And What Happens Next
On April 2, U.S. President Donald Trump introduced a massive set of new import tariffs. Starting April 5, a universal 10% tariff will apply to all imports coming into the U.S. Additionally, certain countries that the administration considers to have unfair trade practices with the U.S. will face even higher tariffs, between 20% - 49%.
See: Trump’s April 2025 Tariffs and What They Mean for Canada
Canada and Mexico were spared this tariff round but they’re still dealing with a separate 25% tariff that was put in place back in March, which were linked to concerns about fentanyl and border issues. In response, Canada has now fired back with its own 25% tariff on U.S. vehicles that don’t meet USMCA rules (applies to $35.6 billion CAD of imports). This is no longer political jockeying.
So what are other countries doing in response? And how might this play out?
Five Ways Countries Are Responding
Several countries have already responded to the wide sweeping tariffs albeit in noticeably different ways (and strategies):
1. Outright rejection - China (54% tariffs) strongly condemned the move, demanding that they 'immediately cancel' the tariffs. Beijing warned of major disruption to global supply chains and didn't rule out retaliation. April 4 update: China responds to Trump's trade war, China's Finance Minster, "For all imported goods originating from the US, an additional tariff of 34% on top of the current applicable tariff rate will be imposed."China will also escalate restrictions on exporting 'rare earth' minerals to the U.S. Markets plunge further.
2. Warning with possible retaliation - The European Union (20% tariffs) said it would respond in a "legitimate, proportionate and decisive" way.
3. Diplomatic concern, open to talks - Japan (24%), India (26%), Taiwan (32%), and Thailand (36%) expressed concern but stressed willingness to work with the U.S. to find solutions. These responders look to want to preserve economic ties.
See: Digital Export Trends and Global Trade Fintech Opportunities
4. Disappointed but remaining calm - The UK (10%) and Australia (10%) criticized the tariffs as unfriendly and unhelpful but said they would not retaliate. Both are preparing for possible economic fallout while exploring alternative trade options.
5. Direct countermeasures or defensive policies - Canada (sector specific 10-25%) and South Korea (25%) have already taken concrete steps. Canada introduced a matching 25% auto tariff and has announced support for affected sectors. South Korea rolled out emergency support measures for affected industries.
The varying responses highlight how different countries are balancing their economic exposure to the U.S., combining political pressure and long term trade strategies.
How This Could Play Out
We anticipate short term volatility, retaliation, legal/political challenges, shifting supply chains and inflationary pressures:
- Stock markets have already negatively responded to the news, and businesses are scrambling to assess how the tariffs will hit their supply chains and costs, especially key sectors likely to be disrupted such as autos, tech, agriculture, and retail.
- With Canada already retaliating and the EU hinting the same, we may see a global trade war spiral deeper, inflation and recessionary pressures.
- Trump used emergency powers under the IEEPA to enact these tariffs without Congress. That may face court challenges, including push back from within their own party. Meanwhile, allies are lobbying behind the scenes for exemptions.
- Countries may move quickly to find new trade partners and diversify supply chains. Canada is already accelerating trade talks with Europe and Asia and rolling out support for local exporters.
See: Resources for Canadian Resiliency and Competitiveness
- U.S. businesses and consumers may absorb the tariff costs, not foreign exporters. This could push up prices on many goods (and make it harder for central banks to set interest rates). Canadian sectors like auto parts, energy, and food could feel indirect pressure from global realignments.
Conclusion
The April 2 tariffs are just the start. Countries are reacting in their own ways, and the situation is still developing. Canadian fintechs should prepare for uncertainty, but also for opportunity.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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