Donald Trump’s trade war has expanded to cover the world, with 25% tariffs on all steel and aluminium imports to the US in effect from today.
The duties were announced in mid-February as stock market investors cheered President Trump‘s ‘America first’ agenda which saw only Mexico, Canada and China come under initial pressure.
While two rounds of tariffs on China have been enacted, 25% duties on some Canadian and most Mexican cross-border trade have been withdrawn until 2 April at the earliest.
The tariffs beginning today are designed to protect US manufacturing and bolster jobs by making foreign-made products less attractive.
They threaten to make the cost of things like cars to soft drink cans – and therefore some drinks – more expensive.
Canada is the biggest exporter of both steel and aluminium to America. However, the White House on Tuesday rowed back on a threat to double the country’s tariff to 50%.
The EU is to retaliate with €26bn of counter tariffs on US goods starting from 1 April, the European Commission said on Wednesday morning.
Commission president Ursula von der Leyen said she remained open to “meaningful dialogue” with the US.
During Mr Trump’s first term, the bloc countered with charges on products such as bourbon and jeans.
The American tariffs are also a threat to UK steel exports – worth north of £350m annually – with the bulk of that coming from stainless steel.
The business secretary Jonathan Reynolds confirmed on Wednesday morning that while he was disappointed, there would be no immediate retaliation by the UK government as negotiations continue over a wider trade deal with the US.
“I will continue to engage closely and productively with the US to press the case for UK business interests,” he said.
Any fall in demand among US customers will leave producers scrambling for new markets, though some could be directed to domestic projects within the UK.
That steel could prove attractive as China, the world’s largest producer of steel, has threatened to limit its exports in response to the Trump tariffs.
Read more:
The man Canada is sending to battle Trump
What’s gone wrong at Musk’s Tesla?
Please use Chrome browser for a more accessible video player
Carney: ‘Canada will win’
President Trump is under growing pressure to row back, particularly in his planned battle with nearest neighbours Mexico and Canada.
Markets have turned on the tariff regime, with jitters about the effects of higher import prices souring the US economy first being seen through the currency and bond markets.
The dollar has lost around five cents against both the pound and a resurgent euro alone in the past few weeks.
Stock markets have joined in, with the combined market value of the broad S&P 500’s constituent companies down by more than $4trn on the peak seen just last month.
The big fear is that the protectionism will push the world’s largest economy into recession – a scenario Mr Trump did not deny was possible during a weekend interview.
👉 Follow Trump 100 on your podcast app 👈
US firms, already also grappling the complexities associated with an expanding tariff regime, are also letting it be known that they expect damage to their own businesses.
Delta Airlines lowered its first quarter growth forecast on the back of the turmoil this week while US firms are increasingly facing product boycotts.
Travel bodies have also reported a big drop in the number of Canadians crossing the US border, with road trips down by almost a quarter last month compared to February 2023 according to Statistics Canada.
Content Source: news.sky.com