President Trump has announced that the US will impose tariffs on steel and aluminium imported from some of its most important trading partners, including the European Union, Canada and Mexico.
The announcement was made by Commerce Secretary Wilbur Ross, who said that the tariffs on imported steel would amount to 25 per cent, and to 10 per cent on imported aluminium. The tariffs were first announced back in March however, the US granted temporary exemptions to certain allies including Canada, Mexico and the European Union. Some other countries, such as Australia, are already limiting their metals exports at the request of the Trump administration.
The decision to end these exemptions now, Ross said, was partly to do with the fact that talks over the North American Free Trade Agreement (NAFTA) are “taking longer than we had hoped.” The talks were due to be completed on Friday. He added that while negotiations with Europe were making “some progress”, not enough had changed to justify allowing it to remain exempt from the charges.
At present, the EU is the US's main source of imported steel, and Canada the main source of its imported aluminium.
In addition to the focus on NAFTA, Ross also said that national security was at the heart of President Trump's decision to enact the tariffs, saying: "We take the view that without a strong economy, you can't have strong national security."
The move has already triggered retaliation from the countries involved, with Mexico announcing that it will introduce counter-tariffs on US products including pork belly, grapes, apples, various cheeses and flat steel. Earlier in the year Canada warned that it would enact "responsive measures to defend its trade interests and workers," should any such tariffs be introduced.
Meanwhile, President of the European Commission Jean-Claude Juncker has described the decision as "protectionism, pure and simple" and said that it presented the European Union with "no choice" but to impose counter-measures. It is believed that products likely to face tariffs in the EU may include US-made jeans, cranberry juice, peanut butter and bourbon.
In response to the news, stocks in American steel and aluminium lifted, most likely because those are the industries that stand to benefit from financial penalties against rival foreign producers. However, the wider market sank, with the DOW falling about 200 points.
It comes at a time when the US is already locked into tough trade talks with another of the world's biggest economies, China. On Wednesday, a spokesperson from China's Foreign Ministry said that although the country wasn't looking for a trade war, they also "aren't afraid of fighting one" after Trump announced that the US would be implementing tariffs on around $50 billion worth of Chinese goods.
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