Merz Aims to Rein In EU Tariff Response, Stocks Sink On EU Tariff Threat, More
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What is the main topic discussed in this episode?
News when you want it with Bloomberg News Now. I'm Erica Herskowitz. German Chancellor Friedrich Merz said he's trying to persuade French President Emmanuel Macron to tone down his response to President Trump's latest threat to slap new tariffs on European allies. Macron intends to request the activation of the European Union's so-called anti-coercion instrument, Bloomberg reported over the weekend. But Merz said that Germany's heavier dependence on exports means it's less willing to unleash the bloc's strongest countermeasure.
What recent tariff threats are impacting EU countries?
European leaders are reeling from Trump's threat to impose tariffs on eight European NATO allies for pushing back against the president's bid to annex Greenland, which effectively rips up last year's EU-U.S. trade accord leaders hoped would stabilize the transatlantic relationship. The NATO countries had said they would undertake token military planning exercises in the semi-autonomous Danish territory, which is considered strategically important for the balance of power in the Arctic region coveted by Russia and China. British Prime Minister Keir Starmer says the UK is coordinating closely with EU on Trump tariff threats.
Tariffs should not be used against allies in this way. In relation to the escalation, look a tariff war is in nobody's interests and we have not got to that stage and my focus therefore is making sure we don't get to that stage and that's what I'm doing at the moment.
British Prime Minister Keir Starmer. Meanwhile, Bloomberg's Brendan Murray says countries are already starting to look elsewhere for trade partners.
Canada made no, they weren't shy about the fact that they are now seeing China as a more reliable trading partner than the U.S. Remember, over the weekend, we had the Europeans, the European Union, signing a new free trade agreement with the Mercosur countries in South America.
Bloomberg's Brendan Murray.
How is Germany responding to Trump's tariff threats?
Trump's latest tariff announcement has sent European shares tumbling from a near record high. The FTSE in London lost a third of a percent. The CAC in Paris fell one and three quarters percent. The DAX in Germany fell one and a quarter percent. And U.S. markets are closed in observance of Martin Luther King Day. But market futures are also reacting negatively to the latest on Greenland, with futures all down between three quarters and one and a half percent. Hennion and Walsh Asset Management CIO Kevin Mann says it's important for investors not to overreact.
We remember during the initial tariff in 2025, through April 8th, the markets were down roughly 15%. And if investors had fled the markets then and gone to the sidelines, they would have missed a run-up of roughly 39% for the S&P 500 from April 8th through the end of the year.
Hennion and Walsh Asset Management CIO Kevin Mann. If Trump follows through with the full 25% tariff threat, it could cut the targeted country's U.S. exports by as much as 50%, with Germany being one of the most exposed countries, according to Bloomberg Economics estimates. Meanwhile, President Trump's proposed Board of Peace has gotten off to a rough start, questioned by Europe, criticized by Israel, and celebrated by friends of the Kremlin. Trump wants the full constitution and remit of the committee signed in Davos Thursday, but some elements of the small print have left invitees wondering whether to accept. Trump is demanding that nations pay a billion dollars for permanent membership of the board, Bloomberg reported, a condition since confirmed by the White House.
That's blindsided world leaders and left many bewildered. Meanwhile, according to a Kremlin spokesperson, Russian President Vladimir Putin has been invited by Trump to join the peace board. Moscow aims to contact the U.S. side to clarify all the details of the proposal. The high-speed train collision in southern Spain has claimed at least 39 lives and left 11 others hospitalized in intensive care. Authorities say a Madrid-bound train derailed and crossed over the opposite tracks, hitting an oncoming train. Most of the dead and injured were on the second train.
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