The tariffs are an economic "game" tied to the U.S. economic history, Vare added, noting that since the 1970s, industry has moved out of the U.S., shifting toward a service economy.

Speaking to "Ringvaade," Vare said: "Today, for example, the U.S. has a $300 billion surplus in services with the European Union, yet it has a $220 billion deficit in goods trade."

Vare added Trump does not consider the service economy part of the "real economy," a view he has long held.

"So this is where that school of thought doesn't associate a service economy with a real economy. And Trump is a representative of that view — he always has been, this is nothing new," Vare added.

"And secondly, this will affect Estonia because we are heavily involved in subcontracting for major European exporters, primarily Germany. Germany accounts for 25 percent of Europe's exports. Germany will take a major hit, and through the supply chain, this will reach Sweden and Finland, and from there, us. Plus, Sweden and Finland themselves are major trade players, and we also do business for them," Vare outlined.

"We may not suffer much directly from lost sales in America, maybe just a few companies, but the supply chains are now completely disrupted globally," he added.

Estonia must also make political decisions regarding the EU's stance on tariffs, Vare said.

Vare noted that the EU has maintained the most powerful customs union for 50 years, and hopes it will apply that strength in the emerging trade conflict.

The 20 percent tariffs on EU goods and "liberation day" as Donald Trump announced it on Wednesday are likely the first real test of his presidency and have already led to a stock market decline and the beginnings of a swelling "blue wall" in special elections held this week.

While tariffs are essentially a tax on goods, the chart Trump presented in the Rose Garden is misleading, as the middle column lists other countries' "tariffs" on the U.S., which includes items that are not tariffs but a trade deficit — since the U.S. imports more goods than it exports. The ensuing U.S. tariffs seem to follow a formula of being half the quoted foreign "tariff" plus around 10 percent.

The longer-term outcomes are harder to predict, but the real "winners" in the short term may be U.S. manufacturers, who may start charging higher prices to take advantage of the situation. At the same time, as Vare noted complex supply chains — many U.S. car components come from China and Taiwan and are exported and re-exported through the U.S. borders with Canada and Mexico, also hit by tariffs, before finishing up in the U.S.

Businesses may also be discouraged by the fact that Trump cannot seek re-election in 2028, meaning everything done so far could be undone after that year.

"Losers" are likely to include poorer Americans, those saving for retirement, and foreign producers, who will be hit by higher prices.

--

Follow ERR News on Facebook and Twitter and never miss an update!