Trump metals tariffs draw swift retaliation from Canada and EU

WASHINGTON – President Donald Trump’s increased tariffs on all US steel and aluminium imports took effect on March 12, stepping up a campaign to reorder global trade in favour of the United States and drawing swift retaliation from Canada and Europe.

Mr Trump’s action to bulk up protections for American steel and aluminium producers restores effective tariffs of 25 per cent on all imports of the metals, and extends the duties to hundreds of downstream products, from nuts and bolts to bulldozer blades and soft-drink cans.

Mr 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 €26 billion (S$37.8 billion) worth of US goods – often with more symbolic than economic impact – from April.

Nevertheless, commission president Ursula von der Leyen told reporters she had tasked trade commissioner Maros Sefcovic to resume talks with US officials on the matter.

“We firmly believe that in a world fraught with geo-economic and political uncertainties, it is not in our common interest to burden our economies with such tariffs,” she said.

Canada, the biggest foreign supplier of steel and aluminium to the US, announced 25 per cent retaliatory tariffs on goods including steel, aluminium, computers, sports equipment and other products worth C$29.8 billion (S$27.6 billion) in total.

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 Australian Prime Minister Anthony Albanese saying the move was “against the spirit of our two nations’ enduring friendship”. However, he

ruled out tit-for-tat duties

, as did Britain.

The other countries most affected by the tariffs are Brazil, Mexico and South Korea, which all enjoyed some level of exemptions or quotas.

Dental floss to diamonds

The 27 countries of the EU are less affected, 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 countermeasures – while impressively eclectic, ranging from dental floss to diamonds and bathrobes, to bourbon – cover only about six days worth of trade in goods and services within the giant EU-US commercial relationship.

France’s Europe Minister Benjamin Haddad warned, however, that the EU could expand its response.

“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.

Mr 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 Ontario province suspended a move to impose a 25 per cent surcharge on electricity exports to some US states.

That incident whipsawed US financial markets already jittery over Mr Trump’s broad tariff offensive.

With the tariff increase well flagged in advance, Asian and European markets were broadly steady on March 12 and US stock index futures rose.

Companies such as Ford, General Motors, Howmet and Honeywell, which use steel and aluminum in their supply chains, were little changed in premarket trading.

Nonetheless, a steep US stocks sell-off in March has wiped out all of the gains notched by Wall Street following Mr Trump’s election.

The back-and-forth US tariff plans have left companies unnerved, upending industries from cars to energy.

“Nearly everyone in the economy is struggling to comprehend wild swings in Washington’s policies, and their implications for every­day decisions,” said Mr Stephen Dover, Franklin Templeton’s chief market strategist.

Luxury carmaker Porsche said it was assessing how to pass the cost of tariffs on to consumers.

US steel producers welcomed the move on March 12, noting Mr Trump’s original 2018 tariffs had been weakened by numerous country- and 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.

Canadian aluminium supplies

The escalation of the US-Canada trade war occurred as Prime Minister Justin Trudeau prepared to hand over power this week to his successor, Mr Mark Carney, who

won the leadership race

of the ruling Liberals last weekend.

Mr Trump repeated on social media that he wanted Canada as “our cherished 51st 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 have made primary aluminium production more cost-effective than in the US, has built a commanding position in the US alu­minium market, as American smelters once revived by Mr Trump’s tariffs have been idled. REUTERS