WASHINGTON - US President Donald Trump’s 25% tariffs on steel and aluminium imports took effect on Wednesday, triggering an immediate reprisal from the European Union as the global trade war enters a new and perilous phase.
Trump’s action to bulk up protections for American steel and aluminium producers restores effective global tariffs of 25% on all imports of the metals and extends the duties to hundreds of downstream products made from the metals, from nuts and bolts to bulldozer blades and soda cans.
The countries most affected by the tariffs are Canada, the biggest foreign supplier of steel and aluminium to the US, Brazil, Mexico and South Korea, which all had enjoyed some level of exemptions or quotas.
The latest US tariffs — applied without exemptions — kicked in after a tumultuous day at the White House, when Trump threatened to double the metals tariffs on Canada to 50%. He later backed off when the province of Ontario agreed to drop plans to impose a 25% surcharge on electricity sent to the US — all while downplaying the risk of a tariff-led recession that has sent US stock markets plunging.
The metals tariffs apply worldwide, to economic rivals as well as close US allies. Major Asian producers including South Korea, Taiwan, Japan and Australia held off on retaliating. The UK said it would focus on “rapidly negotiating a wider economic agreement”.
China, which was not explicitly targeted in the latest trade salvo, didn’t immediately respond — but it did summon the US retailer Walmart, following reports that the US retailer was urging Chinese suppliers to help absorb higher costs.
The European Commission had the strongest reaction so far. It launched “swift and proportionate countermeasures” on US imports, reimposing balancing measures from 2018 and 2020 and adding a new list of industrial and agricultural goods.
The EU’s countermeasures will apply to US goods exports worth up to €26 billion — matching the economic scope of the US tariffs, it said.
“We deeply regret this measure,” European Commission President Ursula von der Leyen said in a statement. “Tariffs are taxes. They are bad for business, and even worse for consumers.”
Trump’s move to widen his trade offensive comes at a hazardous juncture seven weeks into his second term. His rapid effort to rewire the US economy as a global manufacturing power has rattled financial markets, spooked consumers still haunted by pandemic-era inflation and fuelled recession fears amid mounting uncertainty for corporate America.
Trump pressed on with the metals tariffs despite a flurry of last-minute lobbying from US stakeholders, including the country’s largest aluminium producer, Alcoa Corp. The company warned the tariffs would imperil tens of thousands of jobs while raising prices for Americans already feeling their household budgets squeezed.
Trump’s steel and aluminium orders revive and expand his 2018 levies on the metals and prohibit exemptions for products made from either of them. That means some $150 billion worth of imported consumer goods get hit with the new tariffs, according to the research from Global Trade Alert, in addition to raw steel and aluminium.
Trade deal talks
Trump’s advisers are crafting so-called “reciprocal” tariffs on trading partners worldwide that could take effect as soon as April 2. He’s also promised duties on automobiles, semiconductors, pharmaceuticals, lumber and agricultural products.
A Canadian team including Finance Minister Dominic LeBlanc and ONntario Premier Doug Ford will visit Washington on Thursday for talks with US Commerce Secretary Howard Lutnick and other Trump officials to discuss revising the US-Mexico-Canada Agreement on trade (USMCA).
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 Liberal Party last weekend.
On Monday, Carney said he could not speak with Trump until he was sworn in as prime minister. Trump again on social media said he wanted Canada “to become 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 ships about 4 million barrels of crude oil to the US per day via pipeline, mainly to Midwest refineries. Canadian tariffs on American ethanol are also an option, he added.
Most US-Canada trade remains duty free under the USMCA trade deal that Trump signed in 2020, but he continues to complain about Canada’s high tariff rates for dairy products.
Ottawa last week won a month’s reprieve for USMCA-compliant exports from Trump’s general 25% tariffs for Canada threatened over fentanyl trafficking.
But in early April, Canada also faces Trump’s reciprocal tariffs aimed at raising US tariffs to match other countries’ rates and counteract non-tariff barriers.
Canada, with ample hydropower resources that has made primary aluminium production more cost effective than in the US, has built a commanding position in the US aluminium market, even as US smelters once revived by Trump’s tariffs have been idled.
China remains the number two supplier of aluminium and goods made from aluminium, but already faces high tariffs to counteract alleged dumping and subsidies, as well as a new 20% tariff that Trump has imposed over the past month over fentanyl trafficking.
