Trade wars escalate as Trump’s 25% metal tariffs take effect

The tariffs that US President Donald Trump has imposed on steel and aluminum imports are in effect in a move that is likely to foster tensions with America’s biggest trading partner.

It sparked an immediate response from the European Union, saying it would impose rebellious tariffs on billions of euros of US goods.

Trump hopes tariffs will boost US steel and aluminum production, but critics say the price of US consumers and dents will increase the price of economic growth in dens as the US market sinks Monday and Tuesday in response to the fears of a recession.

On Tuesday, Trump made a U-turn by doubling Canada’s tariffs, depending on the additional fees Ontario had kept in electricity.

Tariffs mean that US companies wanting to bring steel and aluminum into the country must pay 25% tax on them.

The EU announced retaliatory tariffs on Wednesday in response to goods worth 26 billion euros (£22 billion).

They will be partially introduced on April 1st and fully implemented on April 13th.

European Union President Ursula von der Leyen added that tariffs are “bad for business and bad for consumers,” and said he “deeply regrets this measure.”

“They are disrupting the supply chain. They bring uncertainty to the economy. Employment is at risk and prices are rising.

She said the EU’s response was “strong but proportionate” and the EU remains “open to negotiations.”

However, the American Iron and Steel Institute (AISI), a group that represents US steel manufacturers, welcomed tariffs to create jobs and boost domestic steel production.

Group president Kevin Dempsey said the move closed a system of exemptions, exclusions and allocations that would allow foreign producers to avoid tariffs.

“AISI will commend the President’s actions, implement a robust and revitalized programme to restore the integrity of tariffs on steel and address unfair trade practices,” Dempsey added.

The US is the leading importer of aluminum and steel, and Canada, Mexico and Brazil are one of the largest suppliers of metals.

Other countries were also quickly responsive to moving.

Trade Secretary Jonathan Reynolds said he was disappointed and “all options were on the table.”

Australia’s Prime Minister Anthony Albanese said the Trump administration’s decision to advance new tariffs was “completely unfair.”

Albanese, who was trying to secure a tariff exemption, said Australia would not impose a retaliatory obligation, as it would only raise prices for Australian consumers.

Meanwhile, Canadian Energy Minister Jonathan Wilkinson told CNN that his country will retaliate, but added that Canada is not trying to escalate tensions.

Canada is one of the closest trading partners in the United States and the largest exporter of steel and aluminum to the United States.

In 2018, President Trump imposed 25% import duties on steel and 10% on aluminum during his first term as president, but the carve-out was ultimately negotiated against many countries.

This time, the Trump administration has shown that there is no exemption.

Gareth Stace, director of Industry Body UK Steel, said the US move was “very disappointing.”

Some steel companies’ contracts have already been cancelled or pending, he said, adding that US customers will have to pay an additional £100 million per year in taxes.

He said he shared Trump’s concerns about cheap steel flooding the market, but urged him to work with the UK rather than oppose it.

“It’s true that President Trump recognizes that we are his friends, not his enemies, and our valued customers in the US are our partners, and they are not our enemies,” he said.

Tariffs will “stricken us hard” when steel imports into the UK rise and the industry is “struggling” with energy prices.

Unite Union called on the government to “act decisively to protect the steel industry” as it is a “national security issue.”

Sharon Graham, Secretary of Unity, said there should be rules “to ensure that the public sector always purchases British-produced steel.”

Michael Dimarino runs Linda Tool, a Brooklyn company that manufactures parts for the aerospace industry. Everything he makes has something to do with a kind of steel, many of which come from American factories.

“If I have a higher price, I pass them on to the customers. They have a higher price, they tell the consumers,” DiMarino said, adding that he supports calls for an increase in production in the US, but warns that the president’s move could backfire.

The American Auto Policy Council, a group representing automotive giants such as Ford, General Motors and Stellantis, also reflects such concerns.

“We are concerned that rescinding the Canada and Mexico waiver specifically adds a significant amount of money to automaker suppliers,” said Matt Blunt, president of the organization.

Some economists warn that tariffs can help the US steel and aluminum industries, but can hurt the wider economy.

“It protects the (steel and aluminum) industry, but it hurts downstream users of the product by making it more expensive,” said Bill Reinsch, a former Commerce Department employee currently at the Center for Strategic and International Research.

Fear of the economic costs of Trump’s trade tariffs has sparked sales in the US and global stock markets accelerated this week after the US president refused to rule out the outlook for an economic recession.

Meanwhile, research firm Oxford Economics said in its report that it has reduced its annual US growth forecast from 2.4% to 2%, making even more sharp adjustments to the outlook for Canada and Mexico.

“Despite the downgrade, we expect the US economy to surpass other major developed economies in the coming years,” the report added.

Additional Reports by Michelle Fleury of New York