Trade War to Trading War

NATO Secretary General Mark Rutte met US President Donald Trump at the White House on 14 July, 2025

Trade War to Trading War

Deepak Razdan

Wednesday, 16 July, 2025

What is proving more lethal in the world today, ballistic missiles or trade tariffs? For Ukraine, ballistic missiles; for Europe, certainly, the trade tariffs.

The New World took birth to create a new economic system based on import tariffs. The human wars were timeless and continued over territorial claims and much more.

Ukraine, facing a Russian war for over three years, is urging the world for weapons to counter Russian missiles. It has some fresh assurances from the United States.

President Donald Trump has offered Patriot air defence systems to Ukraine through NATO, paid for by its European members.

In a significant announcement, President Trump set a limit of 50 days for Russia to accept ceasefire or there will be 100 per cent trade tariffs on countries buying Russian exports. India and China buy Russian oil.

Fifty days is a long time for Ukraine, but still welcome, unless the US leader changes his mind for another option.

The tariffs war continues simultaneously and the new trade tariffs are now slated to come on 1st August. President Trump has already indicated these could include 35 per cent for Canada and 30 per cent for the European Union (EU) and Mexico.

In a letter to European Commission President Ursula von der Leyen, the US President said his country had one of the largest trade deficits with the EU due to EU’s tariffs, non-tariffs and trade barriers. EU is the largest trading partner of the US.

The EU will be required to allow a complete open market access to the US, with no tariff being charged on the US goods, Mr Trump said. If the EU retaliates, the EU counter tariff will be added to the 30 per cent tariff already announced for the EU.

EU responded immediately that the 30 per cent tariff will harm businesses in both countries. On behalf of EU, European Commission President von der Leyen said “imposing 30 per cent tariffs on EU exports would disrupt essential transatlantic supply chains, to the detriment of businesses, consumers and patients on both sides of the Atlantic.”

She pointed out that few economies in the world match the EU’s level of openness and adherence to fair trading practices. “The EU has consistently prioritized a negotiated solution with the US, reflecting our commitment to dialogue, stability, and a constructive transatlantic partnership,” she said.

“We remain ready to continue working towards an agreement by August 1. At the same time, we will take all necessary steps to safeguard EU interests, including the adoption of proportionate countermeasures if required,” the European Commission President made it clear.

Canada had a Summit with the EU recently. Losing hope of consistent trade with the US because of its tariff threats, Canadian Prime Minister Mark Carney spoke to the European Commission President.

The two leaders focused on how to make Canada and the European Union (EU) stronger and more competitive, “faced with changing trade relationships and economic uncertainty.”

They discussed deepening their strategic partnership and boosting co-operation between Canada and the EU, as well as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Mr Carney and the EU leader reviewed the success of the recent EU-Canada Summit and said Canada and the EU are strengthening their partnership in key areas such as industrial policy, digital trade, critical raw materials, and clean technologies.

Going further, the two sides even talked about working together on defence industrial procurement and manufacturing, as part of their new Security and Defence Partnership. They decided to stay in close contact and continue working closely together.

On Tuesday, Mr Carney spoke with President of Mexico Claudia Sheinbaum. The Prime Minister and the President discussed how to strengthen the Canadian and Mexican economies and enhance their global competitiveness, building on their productive meeting at the G7 Summit in Kananaskis, Canada.

Such is the fear of tariffs and trading with the US that Canada is going across the US, building bridges with Mexico and flying over the Atlantic to get closer to the EU.

This is despite the unity among the US, Canada and the EU in supporting and arming Ukraine fighting a difficult war with a stronger rival Russia.

Ukraine may be uniting the world when it comes to Russia’s three-year war against it but it splits quickly on matters of trade.

Placed in a difficult situation, NATO Secretary General Mark Rutte, after a meeting with President Trump at the White House on 14th July hailed  President Trump’s pivotal decision to ensure that Ukraine receives essential military resources, with NATO coordinating the effort with funding from Allies in Europe and Canada.

Mr Rutte said there was momentum from the recent NATO Summit in The Hague where Allies had agreed to a five per cent of the GDP for defence spending target and increased defence industrial production, as well as continued support to Ukraine.

He said NATO is now working on substantial military equipment packages, including air defence systems, missiles, and ammunition. Rather than a single, finite package, there will be a new impetus, focused on rapid, substantial equipment transfers to Ukraine.

“This is Europe stepping up,” he stated, noting commitments from Germany, Finland, Denmark, Sweden, Norway, the United Kingdom, the Netherlands, and Canada, with more expected to follow.

While there is 50 days deadline for Mr Trump’s secondary tariff penalties against Russia, the trade tariff deadline for EU and others comes close in a fortnight.

Struggling to fight the impact of US trade tariffs, EU and Canada have to meet heavy expenditure for the Ukraine war.

If the 50 days deadline for Russia does not show results, there will be issues of credibility of how far the West can counter Russia effectively.

After an unproductive 50 days, the EU will find itself weakened by both Russia and the US.

The EU does not feel confident about its security against Russian threats, while it must suffer the US tariffs that the 27-nation group never imagined it would ever have to face.