The European Union will impose counter tariffs on €26 billion worth of US goods from next month, the European Commission said on Wednesday, ramping up a global trade war in response to blanket US tariffs on steel and aluminium.
The EU executive said, however, that it remained open to negotiations and considered higher tariffs in no one's interest.
US president Donald Trump's increased tariffs of 25 per cent on all steel and aluminium imports took effect on Wednesday as prior exemptions, duty free quotas and product exclusions expired.
The European Commission said it will end its current suspension of tariffs on US products on April 1st and that its tariffs will be fully in place by April 13th.
"The counter measures we take today are strong but proportionate. As the United States are applying tariffs worth $28 billion we are responding with counter measures worth €26 billion," European Commission chief Ursula von der Leyen told reporters.
"The EU must act to protect its consumers and business."
The suspended tariffs apply to products ranging from boats to bourbon to motorbikes, and the EU said it would now start a two-week consultation to pick other product categories.
The new measures will target around €18 billion in goods, with the overall objective to ensure that the total value of the EU measures corresponds to the increased value of trade impacted by the new US tariffs, the EU said.
"In the meantime we will always remain open to negotiations," von der Leyen said.
"We firmly believe that in a world fraught with geoeconomic and political uncertainties, it is not in our common interest to burden our economies with such tariffs. We are ready to engage in a meaningful dialogue."
The proposed target products include industrial and agricultural products, such as steel and aluminium, textiles, home appliances, plastics, poultry, beef, eggs, dairy, sugar and vegetables.
Trump's hyper-focus on tariffs since taking office in January has rattled investor, consumer and business confidence in ways that economists worry could cause a US recession and further lag on the global economy.
China's foreign ministry said Beijing would take all necessary measures to safeguard its rights and interests, while Japan's Chief Cabinet Secretary Yoshimasa Hayashi said the move could have a major impact on US-Japan economic ties.
Close US allies Canada, Britain and Australia criticised the blanket tariffs, with Canada mulling reciprocal actions and Britain's trade minister Jonathan Reynolds saying "all options were on the table" to respond in the national interest.
Australian prime minister Anthony Albanese said the move was "against the spirit of our two nations' enduring friendship" but ruled out tit-for-tat duties.
"Tariffs and escalating trade tensions are a form of economic self-harm, and a recipe for slower growth and higher inflation," he told reporters.
The countries most affected by the tariffs are Canada, the biggest foreign supplier of steel and aluminum to the US, Brazil, Mexico and South Korea, which all have enjoyed some level of exemptions or quotas.
Trump initially threatened Canada with doubling the duty to 50 per cent on its steel and aluminum exports to the US but backed off after Ontario province suspended a move to impose a 25 per cent surcharge on electricity exports to the states of Minnesota, Michigan and New York.
That incident whip-sawed US financial markets already jittery over Trump's broad tariff offensive. Asian markets were broadly steady on Wednesday, although Australia's benchmark closed 9.6 per cent below February's record high.
The U.S. Customs and Border Protection agency cut off imports qualifying for duty-free entry under quota arrangements well before the midnight deadline, saying in a bulletin to shippers that quota paperwork needed to be processed by 4.30pm local time on Tuesday at US ports of entry or the full tariffs would be charged.
The move was welcomed by US steel producers as restoring Trump's original 2018 metals tariffs that had been weakened by numerous country exclusions and quotas and thousands of product-specific exclusions.
"By closing loopholes in the tariff that have been exploited for years, president Trump will again supercharge a steel industry that stands ready to rebuild America," Steel Manufacturers Association President Philip Bell said.
"The revised tariff will ensure that steelmakers in America can continue to create new high-paying jobs and make greater investments knowing that they will not be undercut by unfair trade practices," Bell added.
The escalation of the US-Canada trade war occurred as prime minister Justin Trudeau prepared to hand over power this week to his successor Mark Carney, who won the leadership race of the ruling Liberals last weekend.
On Monday, Carney said he could not speak with Trump until he was sworn in as prime minister. Trump repeated on social media he wanted Canada as "our cherished Fifty First State."
Canadian energy minister Jonathan Wilkinson told Reuters that Canada could impose non-tariff measures such as restricting oil exports to the US or levying export duties on minerals, if US tariffs persist.
Canada, with ample hydropower resources that has made primary aluminum production more cost effective than in the US, has built a commanding position in the US aluminum market, as US smelters once revived by Trump's tariffs have been idled.
China remains the number two supplier of aluminum and goods made from aluminum, but already faces high tariffs to counteract alleged dumping and subsidies, as well as a new 20 per cent tariff that Trump has imposed over the past month over fentanyl trafficking.
Domestically, nerves are growing over Trump's economic agenda. A small business survey on Tuesday showed sentiment weakening for a third straight month, fully eroding a confidence boost following Trump's November 5th election victory. A survey of households by the New York Federal Reserve on Monday showed consumers growing more pessimistic about their prospects.
