President Donald Trump said Thursday that he would soon impose tariffs of 25% on steel imports and 10% on aluminum imports from countries around the world. Analysts agree the tariffs themselves are likely to have minimal impact as steel and aluminum account for about 2% of imported goods.

Rather, analysts worry that the response from U.S. trading partners could be major.

“The big issue there is if there’s retaliatory tariffs … that would become a big issue if that happens,” Jim Paulsen, chief investment strategist at Leuthold Group, said in a phone interview. “If a lot of countries got involved, it’s a dangerous slope that [Trump is] playing here.”

Goldman Sachs said in a note to clients that the tariffs, if finalized as currently proposed, would be “the most substantial trade restriction the Administration has announced to date.”

Retaliation

While much of Trump’s rhetoric on “unfair” trade deals has been directed at China, much of the steel and aluminum imported to the United States actually comes from Canada, Mexico and other countries in the Americas. U.S. trading partners have already started to respond.

Canadian Trade Minister François-Philippe Champagne called the tariff proposal “unacceptable,” with the German Steel Association saying that the proposal would violate World Trade Organization rules.

A pie chart showing the source of aluminum imports to the United States. Chart courtesy of Institute of International Finance with data from the U.S. Geological Survey. More

The European Union announced it would react firmly and unveil “countermeasures” against American goods in retaliation to the tariffs. European Commission President Jean-Claude Juncker said retaliatory policies would be announced “in the next few days” in order to “rebalance” the trade situation between European and the US following the move by Trump.

“This is the risk – that you impose these measures and then other countries respond,” Michael Gapen, chief U.S. economist at Barclays, told Yahoo Finance by phone. “So it’ll have more adverse affects than what we put down but we’d need to know what the retaliations are going to be to have specific analysis.”

In a note to clients, Barclays analysts had said they expected the tariffs themselves to reduce U.S. gross domestic product growth by 0.1-0.2 percentage points. (The most recent reading of U.S. GDP was 2.5% annual growth in the fourth quarter of 2017. A decline of 0.1 or 0.2% would be a small percentage but over time would represent hundreds of billions of dollars.)

The risk of retaliation was likely a known one for the Trump administration. German deputy economy minister Matthias Machnig said on Tuesday that the introduction of tariffs, an idea floated by the Commerce Department had floated earlier in the week that got tacit early approval from Trump, was incompatible with World Trade Organization (WTO) rules and unjustifiable on national security grounds.

“I said we are preparing all options,” Machnig told reporters, adding there was unanimous agreement that the European Commission and member countries “need to take appropriate precautions.”

The EU is targeting products with political punch, revisiting a list compiled during George W. Bush-era trade disputes of symbolic American brands. Potentially in the EU’s sights as targets for tariffs are items such as Harley Davidson motorcycles, bourbon and agricultural exports such as cheese, orange juice, tomatoes and potatoes.

China’s response could be even more harsh because of the scale of trade between the two countries. CNBC reported that China’s Ministry of Commerce is already investigating whether to limit imports of U.S. sorghum, a cereal grain used to feed livestock, in response to previous tariffs from the White House on solar panels and washing machines.

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