President Donald Trump's recent threats to impose new tariffs on Russian oil and on trade partners with significant imbalances have intensified global market uncertainties and raised fears of a potential trade war. These statements have contributed to a tumultuous quarter for Wall Street, with the S&P 500 on track for its worst month and quarter since the onset of the pandemic. Geopolitical tensions and erratic U.S. policies are also shaking international confidence in the U.S. dollar's dominance, prompting the European Union to prepare countermeasures, including the Anti-Coercion Instrument, to protect its market.

In late March 2025, President Trump expressed frustration with Russian President Vladimir Putin over stalled ceasefire negotiations in Ukraine. He threatened to impose secondary tariffs of up to 50% on countries purchasing Russian crude oil if Russia did not agree to a ceasefire. This move aims to pressure Russia into ending its military actions in Ukraine. The effectiveness of these tariffs heavily depends on the reactions of Russia's key customers, notably India and China. India, benefiting from discounted Russian oil, may face increased costs and supply challenges, while China, a significant buyer of Russian oil, is less likely to yield to U.S. pressure but faces economic risks.

Additionally, President Trump has threatened to impose tariffs on major U.S. trading partners with significant trade imbalances. He specifically targeted the European Union, demanding that they reduce their trade deficit with the U.S. by increasing purchases of American oil and gas. Failure to comply, he warned, would result in tariffs.

These tariff threats have contributed to heightened market volatility. Gold prices are approaching their best performance since 1986, signaling investor uncertainty. The S&P 500 is on track for its worst month and quarter since the onset of the pandemic, reflecting concerns over potential trade wars and geopolitical tensions.

In response to potential economic coercion, the European Union has prepared countermeasures, including the Anti-Coercion Instrument (ACI). Effective since December 27, 2023, the ACI allows the EU to take action against third countries that attempt to pressure the EU or its member states through economic means. The instrument enables the EU to impose trade restrictions, such as increased customs duties or import/export licenses, as a last resort to deter and respond to economic coercion.

This is not the first time President Trump has used tariffs as a tool in international relations. During his first term, he imposed tariffs on steel and aluminum imports, leading to retaliatory measures from affected countries, including the EU. The current situation differs in its focus on energy exports and the explicit targeting of countries purchasing Russian oil.

The potential imposition of tariffs on Russian oil buyers and trade partners with significant imbalances could escalate into broader trade conflicts, affecting global supply chains and economic stability. The EU's preparation of the ACI indicates a readiness to protect its economic interests and maintain sovereignty against perceived economic coercion.

In summary, President Trump's recent tariff threats have heightened global market uncertainties, strained international relations, and prompted the European Union to activate mechanisms like the Anti-Coercion Instrument to safeguard its economic interests.