WASHINGTON • Goldman Sachs Group delivered a comprehensive critique of US President Donald Trump's planned metal tariffs, saying they risk damaging the world's biggest economy by raising costs just as price pressures build, hurting allies more than others, and creating a two-tier global market.
"Import tariffs make the US less competitive by raising the prices of raw materials," the New York-based bank said in a report received on Tuesday.
"By imposing across-the-board tariffs to all steel and aluminium imports, the larger economic impact is on Canada, Mexico and the EU, and it ironically eases the economic impact to China and Russia."
Mr Trump's plan has ignited a firestorm of opposition, with criticism from around the globe, senior members of his own party and top manufacturers like Ford Motor.
As Goldman weighed in, BHP Billiton delivered its own assessment, with the world's biggest miner describing Mr Trump's move as a "black day for the world".
"The president has likely created a two-tier metal market," Goldman analysts led by Mr Jeff Currie wrote. "Economically, a two-tier market is ultimately damaging to US downstream industries that consume these metals, as it creates an uneven playing field for US industries that face higher metal prices."
In a sign that Mr Trump's plan risks unleashing a tit-for-tat response from top trading partners, the European Commission has proposed retaliatory tariffs on imports of US steel, apparel, textile and footwear, as well as selected industrial goods, according to a draft seen by Bloomberg News.
That list includes motorcycles, T-shirts, jeans, corn and bourbon.
Goldman said the US action - which invokes Section 232 of the 1962 Trade Expansion Act - would risk adding to inflationary pressures just as the Federal Reserve has been raising interest rates.
"The tariffs reinforce the reflationary pressure already under way globally. Net consumers of steel and aluminium in the US now face cost disadvantages relative to their international competitors, especially at a time when the labour market is tight and wage inflation is picking up," the bank concluded.
"This is the irony of Section 232: A tariff intended to support US industry may end up boosting margins and investment for a small subset of producers while leaving the broader economy at a disadvantage."