From Brussels to Ottawa: The trade war just got personal

It’s looking more and more like Europe and Canada is squarely in the crosshairs of Trump’s tariff cannon—the epicentre of the next trade war aftershock, if you will.

In a late-night Truth Social grenade, President Trump signaled he’s ready to unleash "far larger than currently planned" tariffs on both the EU and Canada if they’re seen teaming up to undercut the U.S. economy. Subtle? Not remotely. The euro wobbled, the loonie twitched, and markets got the message: this just got personal.

Trump’s move to slap 25% tariffs on auto imports has already sent shockwaves through global supply chains. The looming April 2 “Liberation Day” reciprocal tariffs could escalate things further. Brussels is quietly syncing notes, polishing up its anti-coercion instrument, and prepping for retaliation—but let’s be honest, Europe doesn’t move with the speed of Wall Street’s headline algos, and U.S. tariff firepower lands fast and heavy.

Canada’s risk profile is more surgical than sweeping. PM Mark Carney’s recent charm offensive in Paris and London may have inadvertently painted a target on his back, especially given Canada’s export-heavy, U.S.-dependent economy. The loonie may not be in full panic mode, but it's starting to show signs of stress.

The real hit, however, is landing in the FX space, and it’s not the euro or CAD leading the charge. Both are relatively stable—likely dulled by tariff fatigue and well-worn positioning. But over in Asia, it’s a different story. The Japanese yen (JPY) and Korean won (KRW)—both currencies of big-ticket auto exporters—are getting tossed around like leaflets in a tariff storm.

JPY and KRW are underperforming sharply, as traders brace for collateral damage from U.S. auto tariffs. With the BoJ still crawling toward normalization and South Korea’s economy deeply tied to global trade, these currencies are the first to flinch when Washington rattles the trade sabers. It’s a classic case of FX triage—where the real pressure bleeds out in places most exposed to supply chain friction.

Meanwhile, Germany’s auto sector just caught another downdraft. New car registrations fell 3.1% in February, and with Berlin responsible for nearly half of the EU’s $52 billion in auto exports to the U.S., the $3.7 billion hit to Porsche, Mercedes, and the gang is likely just the down payment.

Trump’s claim that the tariffs will be “very lenient” may calm nerves temporarily—but anyone who’s watched this movie before knows the script: ramp up the rhetoric, then dial it back just enough to declare victory. Even so, bloc-wide, double-digit tariffs are still on the table, and that’s enough to keep traders on edge.

Bottom line: Europe and Canada might be the marquee targets, but Asia’s auto-linked currencies are where the pain is registering now. With autos, semis, lumber, and pharma all potentially in play, and April 2 circling on the calendar like a date with destiny, the real question isn’t if tariffs will hit—it’s how deep they’ll cut and which markets will bruise first.