By David Lawder, Andrea Shalal and Philip Blenkinsop
WASHINGTON/BRUSSELS (Reuters) – President Donald Trump’s increased tariffs on all U.S. steel and aluminum imports took effect on Wednesday, stepping up a campaign to reorder global trade in favor of the U.S. and drawing swift retaliation from Europe.
Trump’s action to bulk up protections for American steel and aluminum 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.
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 U.S. 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 U.S. 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 U.S.
“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 U.S.-Japan economic ties.
Close U.S. 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 aluminum to the U.S., 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%, because “only a small fraction” of the targeted products are exported to the U.S.
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-U.S. 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% on its steel and aluminum exports to the U.S. but backed off after Canada’s Ontario province suspended a move to impose a 25% surcharge on electricity exports to the U.S. states of Minnesota, Michigan and New York.
That incident whip-sawed U.S. 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% below February’s record high.
The imposition of tariffs was welcomed by U.S. 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.
U.S. ECONOMY FEARS
The escalation of the U.S.-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 U.S. or levying export duties on minerals, if U.S. tariffs persist.
Canada, with ample hydropower resources that have made primary aluminum production more cost effective than in the U.S., has built a commanding position in the U.S. aluminum market, as U.S. 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 20% tariff that Trump imposed over the past month over fentanyl trafficking.
(Reporting by David Lawder; additional reporting by Philip Blenkinsop in Brussels, Andrea Shalal in Washington, Mark John in London, David Ljunggren in Ottawa, Jarrett Renshaw and Arathy Somasekhar in Houston, Shubham Kalia and Gnaneshwar Rajan in Bengaluru and Renju Jose in Sydney; Editing by Lincoln Feast, Christina Fincher and Toby Chopra)
