(Editor’s note: Paperjam has contacted other Luxembourg players to get their reactions. This article may be updated throughout the day).

“,” Northern Trust’s chief economist Carl Tannenbaum said at an Alfi conference in Kirchberg last week. Tariffs, at their core, are taxes. And history shows that tariffs tend to penalise American consumers the most, he added, pointing to the niche example of tariffs imposed on Korean washing machine makers LG and Samsung in 2018. The tariffs did not succeed in boosting manufacturing in the US; instead, prices went up and the cost to American consumers was estimated at $1.5bn.

And yet in an executive order published on 2 April, US president Donald Trump, under the International Emergency Economic Powers Act of 1977, said that he intends to use tariffs to “address the national emergency posed by the large and persistent trade deficit that is driven by the absence of reciprocity in our trade relationships.” A 10% tariff on all countries will take effect on 5 April 2025;  on the countries with which the US has the largest trade deficits will take effect on 9 April 2025. A 20% tariff on goods from the European Union will be imposed. These come after the US announcement of a  in February and a  at the end of March.

“President Trump’s announcement of universal tariffs on the whole world, including the EU, is a major blow to the world economy,” stated European Commission president Ursula von der Leyen, expressing her deep regret over this choice. “The global economy will massively suffer,” she said, whilst “tariffs will also hurt consumers around the world.” People will face higher grocery bills, more expensive medication, increased transport costs and higher inflation. “All businesses--big and small--will suffer from day one.” But “we are prepared to respond,” she added, noting that the EU is finalising a package of  and is preparing further countermeasures to protect its interests.

Already, stock markets have plunged in response to Trump’s announcement. As of writing, the French Cac40 is down 2.5%, Germany’s Dax is down 2.2%, the UK’s Ftse100 is down 1.5% and Japan’s Nikkei index is down 2.77%. In the US, Dow Jones futures have lost over 1,200 points (2.88%), S&P500 futures have dropped 3.4% and Nasdaq-100 futures have decreased by 3.88%. In premarket trading, Nike share value has dropped 9.5%, Apple is down 7% and Tesla has lost 5.9%.

Against the backdrop of market movements and EU reactions, Paperjam took the temperature of the local industry associations, companies and politicians. Here’s what they had to say.

“An era of uncertainty”

We are facing an era of uncertainty, business federation Fedil’s managing director told Paperjam. “This calls into question the organisation of international trade as it has been conducted in recent years, and it raises many questions about the partnership we have with the United States. It’s a partnership that goes beyond trade alone. Many European companies have invested in the US, and many American companies have invested in Europe. These companies are losing their bearings and facing an era of uncertainty that was unexpected just a few months ago.”

Winkin further noted that not all economic sectors will be affected equally, both in terms of their imports and in the search for new markets. He sees the defence industry as an opportunity for European manufacturers to compensate for the loss of revenue in the American market. But this will remain limited, he believes.

Fedil’s managing director fears, however, that the high tariffs imposed on Asian and Chinese products will encourage companies from these countries to seek new markets in Europe, thereby increasing the competition faced by European manufacturers. In light of the Asian threat, Europe must remain agile and respond quickly to potential dumping situations. He also fears that the commission’s response will affect intermediate products, which would--in turn--penalise European manufacturers. Winkin expects the commission to first focus its response on finished products and not on intermediate products, which would penalise European manufacturers twice over. And second, if there is a response, that the revenue generated will be used to support penalised European exporters.

Finally, Winkin added that he would like the commission--given the situation--to consider the cost that administrative burdens, overregulation and CO2 costs impose on European imports. These are veritable “export taxes” that he hopes to see eliminated.

And this uncertainty may persist

Daniele Antonucci, chief investment officer at the Luxembourg-headquartered Quintet Private Bank, also highlighted uncertainty in his comments on the situation. “With uncertainty soaring to unprecedented levels ahead of yesterday’s announcement, the market was looking for clarity. For now, however, it is difficult to say if we have decisively moved past peak uncertainty,” he stated. “Uncertainty may persist for multiple reasons, including because bilateral negotiations could prove lengthy and implementation extremely complex, especially given exemptions. Further, it remains to be seen how long these tariffs could be in effect.”

“Looking solely at the tariff impact, we see downside risks to US and global economic growth and upside risks to inflation in the US but also elsewhere if there were retaliation.” Given potential exemptions, however, it’s difficult to gauge the exact impact that tariffs may have, Antonucci said, adding that market volatility is expected to “remain elevated in the coming days and weeks as markets attempt to fully assess the impact.”

Tariffs likely to fuel inflation in US

“It is probably much too early to tell what the exact impacts of these tariffs will be as this has never happened before, especially in such an interconnected world where supply chains and the distribution of products and services [span the globe],” commented , CEO of the Association of the Luxembourg Fund Industry. “Short-term, we have seen--and we will probably continue to see--downward pressure on asset valuations as the tariffs are likely to fuel inflation in the US and will have an immediate impact on growth across the globe.”

“Financial analysts are getting their heads around specific sectoral impacts of these tariffs and we expect that there will be significant differences in how sectors will be affected,” Weyland added. “This situation should create investment opportunities for the best active asset managers and might confirm a trend which we have seen in recent months of rotation away from passive investments into more active asset management.”

, CEO of the Luxembourg Bankers’ Association (ABBL), also weighed in. “The introduction of customs duties on imports from the European Union to the United States has no direct impact on the banking centre, since these duties generally concern products and not services,” he said. “Nevertheless, as many experts have pointed out, in a customs war everyone loses. We can therefore expect a general economic slowdown, which will inevitably affect the banks.”

All in the same boat

The reaction from local company Vinsmoselle was measured. For the wine and crémant producer, the US represents “a niche market” for exports. “It’s on the order of a few pallets a year, no more. So we’re not particularly worried,” says the cooperative’s general manager, .

Trump’s decisions could, however, have “an impact on the development prospects” outlined by the recent merger in Wisconsin between wholesaler Ansay International and another local distributor. “This could complicate things,” admits the Vinsmoselle director. Ansay International, also a partner of Brasserie Nationale, has been distributing Luxembourg wines and crémants on the US market since 2016.

“In terms of development, our priority is more focused on the Baltic and Scandinavian countries,” continues Mehlen. “In any case, all European wines, crémants and champagnes are affected [by the increase in customs tariffs in the US], so we’re all in the same boat.” Perhaps the 20% tax will be more unfavourable to champagnes than to crémants. It’s difficult to say, and only time will tell.

View from the steel sector

With talk of tariffs and the launch of the EU’s Clean Industrial Deal in February, the steel industry is one of the sectors that has been in the spotlight in recent weeks. Contacted by Paperjam, ArcelorMittal acknowledged that the multinational steel manufacturing corporation, like the entire European steel industry, “has a whole set of challenges ahead,” and the imposition of new US tariffs is one of those challenges.

Volumes shipped to the US market represent approximately 10% of the production of ArcelorMittal facilities in Luxembourg, said the company, and are made up of beams and sheet piles produced in its facilities in Differdange and Belval. “ArcelorMittal is supportive of trade policy designed to address and provide protection from unfair trade on steel markets. Urgent support is therefore required in Europe to address the situation and support the competitiveness and sustainability of European steelmaking.”

The end of multilateralism, an opportunity for Europe?

“We must not panic,” emphasised MP (DP). “I believe that, if the EU shows its unity, we can cope. Afterwards, I see that Donald Trump talks a lot, speaks loudly, but often backtracks. I also see that the Americans are as afraid as the Europeans about this trade war. We’ll have to wait a little while to see if it persists. For us Europeans, this is the time to show our strength. From this perspective, this affair can be seen as an opportunity.”

Indeed, this is the moment for Europe to strengthen trade relationships with partners besides the US, added MP (Pirates). “These tariffs will first increase inflation in the United States and upset Donald Trump’s voters. For us Europeans, now is the time to assert ourselves, to become more resilient and open up new markets with partners like Canada, Mexico, Brazil and Asia.”

For MP (déi Gréng), this is a sign that Europe must rethink its industrial policy. “This is a very worrying situation in which both Europeans and Donald Trump’s voters will face higher prices. To divert attention from this unwanted effect, Donald Trump is attacking rules relating to diversity and equality in companies, even non-American ones. Faced with this situation, Europe, the European Commission and the member states must be united in responding. Against Trump and also in support of European companies. In the medium- and long-term, Europe must rethink its industrial policy.” Whilst she’s in favour of simplification, this must not come at the expense of values.

The situation also presents an opportunity to boost European autonomy. “By calling the rest of the world ‘scavengers’ and significantly increasing tariffs--by 20% more for Europe--Trump is effectively declaring the end of the era of free trade and a neoliberal economic order based on competition,” said MP (LSAP). “We are returning to a mercantilist era, where trade is seen as a weapon, in this case to promote ‘made in America’ ​​goods and repatriate manufacturing jobs. The immediate consequence will be inflation on almost all products for American consumers, and a disruption of global trade. For us Europeans, these measures are an opportunity to strengthen our autonomy and review our economic priorities.”

It’s a sad reality, but one that must be faced, MP (CSV) told Paperjam. “I am devastated by this decision, which calls into question the entire global economic system and creates a high level of insecurity for businesses. It’s the end of multilateralism in trade relations. It’s sad. Especially since I don't see the benefit of this increase in customs duties for the American economy, whose businesses will be penalised by the retaliatory measures that are sure to be taken. I don’t understand. But we’re going to have to face this reality. In my opinion, Europe must react appropriately by first trying to pick up the pieces. If that’s impossible, we’ll have to be firm.”