WASHINGTON/BRUSSELS: President Donald Trump’s increased tariffs on all US steel and aluminium imports took effect on Wednesday, stepping up a campaign to reorder global trade in favour of the US and drawing swift retaliation from Europe.
Trump’s action to bulk up protections for American steel and aluminium producers restores effective global tariffs of 25 per cent 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.
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.
The European Commission, the executive arm of the European Union charged with coordinating trade matters, responded swiftly, saying it would impose counter tariffs on up to 26 billion euros ($28 billion) worth of US goods — often with more symbolic than economic impact — from next month.
“We are ready to engage in meaningful dialogue,” Commission President Ursula von der Leyen told reporters, adding she had tasked Trade Commissioner Maros Sefcovic to resume his talks with the US.
“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,” she said.
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.
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 have enjoyed some level of exemptions or quotas.
Dental floss to diamonds
The 27 countries of the EU are less impacted, for now. Germany’s Kiel Institute estimated a hit to EU output of only 0.02 per cent, because “only a small fraction” of the targeted products are exported to the US.
The EU’s own counter-measures — while impressively eclectic ranging from dental floss to diamonds and bathrobes to bourbon — only cover goods worth about six days’ worth of trade in goods and services within the giant EU-US commercial relationship. France’s Europe Minister Benjamin Haddad said a trade war was in no-one’s interest but warned the EU could go further.
“For example, if it came to a situation where we had to go further, digital services or intellectual property could be included,” he told TF-1 TV.
Trump initially threatened Canada with doubling the duty to 50 per cent on its steel and aluminium exports to the US but backed off after Canada’s Ontario province suspended a move to impose a 25 per cent surcharge on electricity exports to the US states of Minnesota, Michigan and New York.
That incident whip-sawed US financial markets already jittery over Trump’s broad tariff offensive. Asian and European markets were broadly steady on Wednesday, although Australia’s benchmark closed 9.6 per cent below February’s record high. The imposition of tariffs 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.
