The trade wars threatening to push the global economy into recession are entering a new phase, with the United States and European Union escalating a dispute that endangers the world's biggest trade relationship.
After the Trump administration slapped steep tariffs on USD 7.5 billion in EU goods, mainly traditional produce like cheese and wine, the Europeans made clear they would retaliate in kind. Some fear the tariffs could ultimately lead to US taxes on European cars, a big economic blow that Trump has been threatening to deliver for months.
The exchange echoes how the US and China ratcheted up a tariffs fight in recent months that has bruised businesses around the globe and stunted economic growth.
"This step triggers fears of a new round of escalation of tariff wars," said Alex Kuptsikevich, a financial analyst with brokerage FxPro.
"The introduction of tariffs and fears of tit-for-tat steps could further suppress business sentiment, which is already at the lowest levels for years."
"In the current context, it's going to be hard to contain. The Europeans feel like their economies are under assault by the Trump administration."