Nations puzzle over how to respond to US trade war as global markets wobble

America’s trading partners wrestled with responses to US President Donald Trump’s blast of tariff hikes and some planned to send negotiators to Washington, while the head of the European Union’s executive commission offered mutual reduction of tariffs to zero on some goods.

“We stand ready to negotiate with the United States,” said commission President Ursula von der Leyen.

“Indeed, we have offered zero for zero tariffs for industrial goods, as we have successfully done with many other trading partners. Because Europe is always ready for a good deal.”

But she warned that “we are also prepared to respond through countermeasures and defend our interests”.

China has already hit back against the US with retaliatory tariffs and similar actions from Europe and elsewhere remain a significant possibility.

The US and the EU had a zero-for-zero deal on wine and spirits from 1997 to 2018, and reducing many tariffs to zero was a goal of complex negotiations for a US-Europe free-trade deal before negotiations stalled in 2016, during Mr Trump’s first term.

Yet there was little indication Mr Trump is ready to deal. The EU trade commissioner, Maros Sefcovic, spoke for two hours to the Trump administration on Friday and would say only that “we stay in touch”.

And White House trade adviser Peter Navarro told CNBC on Monday that an offer by Vietnam to eliminate tariffs on US imports would not lead to a pullback on the the newly announced 46% levy on its imports to the US.

“Let’s take Vietnam. When they come to us and say ‘we’ll go to zero tariffs’ that means nothing to us because it’s the non-tariff cheating that matters,” Mr Navarro said on CNBC.

Major trade partner China was taking a tougher line and accused the US of “bullying” after imposing a 34% tariff on Friday on all US goods, the exact same rate Mr Trump slapped China with in his latest round of new import taxes.

Several other countries said they were sending trade officials to Washington to try to talk through the crisis, which has cast uncertainty over the global economic outlook, hammered markets and left US allies wondering about the value of their ties with the world’s largest economy.

European Union trade ministers were closeted on Monday in Luxembourg to weigh possible steps that could include taxes on US tech companies such as Google, Apple and Amazon.

The European Union’s executive commission – which handles trade issues for the 27-country bloc – is set to impose tariffs on Jeans, whiskey and motorcycles on Wednesday in response to Mr Trump’s increase in steel and aluminium tariffs.

But it has not decided a response yet to Mr Trump’s “reciprocal” tariff of 20% on European goods announced Wednesday and a 25% tariff imposed on autos from everywhere.

French officials have raised imposing tariffs on services such as internet commerce or financial services, where the US sells more than it buys from Europe and is in theory more vulnerable than in goods trade.

Germany’s economy minister, Robert Habeck, was defiant as he arrived, saying the premise of the wide-ranging tariffs was “nonsense” and that attempts by individual countries to win exemptions have not worked in the past.

It is important for the EU to stick together, he said. That “means being clear that we are in a strong position — America is in a position of weakness”.

So far the European approach has been to selectively target politically sensitive goods rather than impose sweeping retaliation since like most economists officials they view tariff wars as a lose-lose game.

In Asia, South Korea’s Trade Ministry said its top negotiator, Inkyo Cheong, will visit Washington this week to express Seoul’s concerns over the 25% tariffs on Korean goods and discuss ways to mitigate the damage to South Korean businesses, which include major car makers and steel makers.

Asian countries are among the most exposed to Mr Trump’s tariffs ranging from a baseline 10% to 50% since their export-oriented economies send a lot of goods to the US.

Pakistan also planned to send a delegation to Washington this month to try negotiate over the 29% tariffs on its exports to the US, officials said. The prime minister ordered finance minister Muhammad Aurangzeb to assess the tariffs’ potential impact on Pakistan’s fragile economy and draw up recommendations.

The US imports around five billion dollars (£3.9 billion) worth of textiles and other products each year from Pakistan, which heavily relies on loans from the International Monetary Fund and other lenders.

In Southeast Asia, Malaysia’s trade minister Zafrul Abdul Aziz said his country will seek to forge a united response from the Association of Southeast Asian Nations to Mr Trump’s sweeping tariffs.

As chair of the 10-nation body this year, Malaysia will lead a meeting Thursday in its capital Kuala Lumpur to discuss broader implications of the trade war on regional trade and investment, Mr Zafrul told reporters.

“We are looking at the investment flows, macroeconomic stability and ASEAN’s co-ordinated response to this tariff issue,” Mr Zafrul said.

He said that he had met the US ambassador to Malaysia to try to clarify how the US came up with its 24% tariff.

Indonesia, one of the region’s biggest economies, said it would work with businesses to increase its imports of US wheat, cotton, oil and gas to help reduce its trade surplus, which was 18 billion dollars (£14 billion) in 2024.

Co-ordinating economic affairs minister Airlangga Hartarto told a news conference that Indonesia will not retaliate against the new 32% tariff on Indonesian exports, but would use diplomacy to seek mutually beneficial solutions.

Some Southeast Asian neighbours, including Vietnam, Cambodia, Laos and Myanmar, face tariffs of more than 40%, giving Indonesia a slight advantage, he noted.

“For Indonesia, it is also another opportunity as its market is huge in America,” Mr Hartoto said. He said Indonesia would buy US-made components for several national strategic projects, including refineries.

Turkey was hit with a baseline 10% tariff in Mr Trump’s announcement last week, compared with higher tariffs for many other countries, raising the prospect that the world’s 17th largest economy could leverage an advantage from the tariff regime.

Finance minister Mehmet Simsek said on Monday that the country’s focus on domestic demand rather than exports would mean a more limited impact on the economy.

“Turkey has free trade agreements with a total of 54 countries outside the US and the EU,” he said, adding that “68% of our exports go to these countries”.

Turkey has a customs union with the European Union that removes trade restrictions.

Speaking on Friday, the day after Mr Trump’s announcement, Mr Simsek said Turkey’s “relatively low tariff rate may provide a comparative advantage in some sectors”.

Can Selcuki, managing partner of Istanbul Economics Research, said the main negative effect on Turkey would likely be through intermediate goods it supplies to countries or entities that export to the US which are subject to higher rates, such as the EU, which is subject to a 20% tariff.

Turkish exports to the US were 16.7 billion dollars (£13.07 billion) in 2024, according to the Office of US Trade Representative. It imports a similar level of goods and services from America.

This level is dwarfed by exports to the EU, which President Recep Tayyip Erdogan said in January reached 108.7 billion dollars (£85.08 billion) last year.

“Any loss of competitive power of EU products inevitably impacts Turkey because Turkey exports intermediate goods to input to final EU products,” Mr Selcuki said. “This is the most obvious negative part.”

Turkey, however, could exploit the new global trade environment to its advantage.

“A lot of manufacturing production will have to be relocated and the picture Trump is drawing is telling everybody to rethink their supply chains,” Mr Selcuki added.

“Turkey, with its strong manufacturing base and closeness to the EU, is in a unique position to make use of this reorganisation.”

Sekib Avdagic, president of the Istanbul Chamber of Commerce, suggested that companies based in countries with higher tariff rates, such as China, may seek to open factories in Turkey to export to the US under a lower rate.

“Turkey’s use of this opportunity will depend on its strategy to develop its export sectors and find new markets,” he told the state-run Anadolu news agency.