Foreign leaders, automakers and drugmakers are scrambling to avoid President Trump’s plan to upend the global trade regime by imposing reciprocal tariffs on friends and foes alike.
They are considering a mix of price increases, production shifts or bilateral deals to lower tariffs on U.S. goods to mitigate the sting of what Mr. Trump and his team decide to impose on April 2.
Some nations are taking a collaborative approach. Prime Minister Keir Starmer recently told Parliament that Britain and the U.S. were “negotiating an economic deal, which covers and will include tariffs if we succeed.”
Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer met Wednesday with British officials, and efforts to strike a deal “will continue to unfold over the coming days and weeks,” according to the Commerce Department.
Mr. Lutnick said any deal must “lower barriers for American companies while creating jobs in both countries and supporting the growth of critical sectors of the economy,” the department’s readout said.
Mr. Trump said India might reduce its high tariffs on U.S. goods instead of waging a trade war.
“They have agreed, by the way — they want to cut their tariffs way down now because somebody is finally exposing them for what they have done,” the president said this month.
In his second term, Mr. Trump has imposed 25% tariffs on steel and aluminum products from other countries and 20% tariffs on Chinese goods while threatening hefty levies on North American neighbors.
Mexico has sought a middle ground by pointing to the potential downsides of tariffs on automakers while refusing to be confrontational. China has taken a similar tack, responding to Mr. Trump’s tariffs with retaliatory levies seen as relatively restrained.
The European Union and Canada seem ready for a fight. They are imposing retaliatory measures over existing steel and aluminum tariffs and say they are open to negotiation but will not back down in a trade war.
“All this showed you is that Europe and Canada do not respect Donald Trump and do not respect America’s ability to build its steel and aluminum industry, which is vital for national security,” Mr. Lutnick said on Bloomberg TV. “Whereas you watched Mexico and you watched the U.K. be pragmatic and thoughtful, and the way we’re going to deal with them is going to be better.”
For weeks, Mr. Trump has pledged to pursue reciprocal tariffs on any nation that imposes tariffs or other burdens on U.S. exports. He said those levies would go into effect in April, potentially triggering a broad trade war and causing ripples in the economy.
“April 2 is a liberating day for our country,” Mr. Trump told reporters Sunday on Air Force One. “We’re getting back to some of the wealth that very, very foolish presidents gave away because they had no clue what they were doing.”
The White House has been quiet about potential exemptions or how the tariffs will be structured, though Treasury Secretary Scott Bessent said the administration is willing to work with countries that negotiate.
“Each country will receive a number that we believe represents their tariffs. For some countries, it could be quite low. For some countries, it could be quite high,” Mr. Bessent told the Fox Business Network’s “Mornings with Maria.” “We are going to go to them and say, ‘Look, here’s where we think the tariff levels are, non-tariff barriers, currency manipulation, unfair funding, labor suppression, and if you will stop this, we will not put up the tariff wall.’”
German automaker Audi said Tuesday it is considering moving production into the U.S. or raising prices as it braces for the impact of new duties.
Executives described their plans as part of a report on Audi’s performance in 2024. It was a challenging year for the luxury brand, an arm of Volkswagen, and other German automakers.
The companies face hurdles from Mr. Trump’s plan to impose tariffs on certain imports from the European Union and from Mexico, where Audi has a massive plant in San Jose Chiapa.
Finance chief Juergen Rittersberger said Audi is mulling “the extent to which we will have to pass on at least some of the tariffs to our customers in the form of price increases,” according to Reuters.
Tariffs are taxes or duties on imported goods. Importers of record, often U.S. companies, pay the tariffs to the U.S. government as goods enter the country.
The levies can protect domestic industries by making foreign products less attractive and forcing manufacturers to move their operations into the U.S. to avoid tariffs. Yet they increase costs along the supply chain and are sometimes passed along to consumers.
Mr. Trump said his message is simple: Make your goods in the U.S., and you won’t get taxed.
Audi signaled that it was considering that message.
“We are also currently assessing various scenarios for additional localization in North America — among other things, to be closer to the needs of local customers and to make ourselves more resilient to global economic uncertainties,” CEO Gernot Dollner said.
The automotive industry is one of several sectors bracing for the fallout from trade wars.
The pharmaceutical industry is reportedly lobbying for carve-out from levies, warning of drug shortages and increased patient costs. Novo Nordisk, a Danish company, makes blockbuster weight loss drugs such as Wegovy and Ozempic.
Swiss drugmaker Novartis said it is watching the tariff debate closely.
“The real key is to see what are the policies that are actually implemented versus what’s being said in the rhetoric,” CEO Vas Narasimhan said at an event in Japan this week. “And then we’re just going to have to respond appropriately.”
Fresenius Medical Care, a German maker of devices to treat kidney failure, said it set up a “tariff task force” to look at the issue.
“We are looking at closely some of the dialysis machines and consumables that we import from Europe and Germany, specifically,” CEO Helen Giza told CNBC. “We’re looking to see what happens with the tariffs in Europe and what also happens with tariffs on medical equipment. So far, we feel pretty good about the kind of exposure and analysis we’re doing. But obviously, we’re watching it closely, and any reciprocal tariffs that happen elsewhere, being a global company.”
Pharmaceutical Research and Manufacturers of America said the industry is a top manufacturer and many companies have already set up shop in the U.S., so it shouldn’t be collateral damage in trade spats.
“Tariffs on medicines would make it harder for companies to invest more in the U.S.,” said Megan Van Etten, vice president of public affairs at PhRMA. “We believe the U.S. should alternatively use trade measures to eliminate unfair practices abroad while continuing to streamline regulations to decrease the time and cost to build in America.”
Mr. Trump has previously threatened to impose hefty levies, only to pull back. He delayed 25% tariffs on goods from Canada and Mexico for a month before imposing them in early March. He exempted a large suite of products covered by the North American trade agreement he struck during his first term.
Blanket reprieves are likely over, however.
Vice President J.D. Vance said Tuesday that Mr. Trump is “dead serious” about using tariffs to spur production at home.
“We believe that tariffs are a necessary tool to protect our jobs and our industries from other countries, as well as the labor value of our workers in a globalized market,” Mr. Vance told manufacturers at the American Dynamism Summit.
He said too many companies got “addicted” to the drug of cheap labor abroad.
“Our goal is to incentivize investment in our own borders, in our own businesses, our own workers and our own innovation. We don’t want people seeking cheap labor, we want them investing and building right here in the United States of America,” Mr. Vance said.
Mr. Vance said erecting a “tariff wall” around domestic industries while offering cheaper energy and other incentives so companies can build in America will spur development at home.
Some sectors, including the steel industry and some U.S. automakers, have cheered that approach, but investors on Wall Street are skittish. The markets rebounded slightly in recent days from a multiweek sell-off, though fears of a recession and trade battles could lead to more turmoil.
Automakers and other sectors are girding for the potential fallout.
“Amid a difficult environment with intensified competition and a sluggish economy, we kept Audi on track in 2024 and closed out the year on financially sound footing,” Audi Chief Financial Officer Jurgen Rittersberger said. “However, we still have a tough road ahead of us.”
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.
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