The Trump administration announced it’s imposing tariffs on steel and aluminum imported from the European Union, Canada and Mexico, a move immediately condemned by America’s closest allies.
The decision came hours before temporary exemptions were due to elapse at 12:01 a.m. Eastern Time on Friday. The move marks the administration’s most aggressive trade action yet against major U.S. trading partners, which had been fighting for permanent relief. The EU, Canada and Mexico together account for about 40 percent of U.S. steel imports.
The EU said it would take immediate steps to retaliate, while Mexico vowed to impose duties on everything from U.S. flat steel to cheese. Canada’s government announced plans to impose tariffs on U.S. steel, aluminum and other products, effective July 1, that will stay in effect as long as the American tariffs stay in place.
“This is a bad day for world trade,” European Commission President Jean-Claude Juncker said in Brussels after the announcement. “It’s totally unacceptable that a country is imposing unilateral measures when it comes to world trade.”
The tariffs add to mounting worries over a trade war as the Trump administration also considers tariffs on U.S. auto imports -- which could hit top suppliers from Mexico, Canada, Japan and Germany -- and plans to levy duties on $50 billion in Chinese goods.
The EU said on Thursday it will impose retaliatory duties, a measure the bloc earlier indicated would target $3.3 billion in American products from Harley-Davidson Inc. motorcycles to Levi Strauss & Co.’s jeans as well as bourbon whiskey. The bloc also plans to proceed with a case at the World Trade Organization against the U.S. import restrictions.
The tariffs come as Group of Seven finance ministers including U.S. Treasury Secretary Steven Mnuchin and central bank governors prepare to meet in the Canadian resort town of Whistler. Growing trade tensions have clouded a benign outlook for the global economy, which is on track to grow at its fastest pace since 2011 this year and next, according to the IMF.
U.S. Commerce Secretary Wilbur Ross said there wasn’t enough progress in discussions with the EU over trade concessions and Canada and Mexico on rewriting the North American Free Trade Agreement to give them permanent exemptions from the metals tariffs.
“We continue to be quite willing and eager to have further discussions with all of those parties,” Ross told reporters on a conference call on Thursday. “We are awaiting their reaction.”
Stocks in the U.S. fell as the administration ignored the pleas from business lobbying groups including the U.S. Chamber of Commerce to forego tariffs.
Ross said he’s looking forward to “continued negotiations" with Canada, Mexico and EU “because there are other issues" that need to be resolved. There’s potential “flexibility” in the future because the president has the power to increase or cut tariffs, remove them, or enact quotas, he said.
Ann Wilson, vice president of government affairs at the Motor & Equipment Manufacturers Association, said in a statement: “Tariffs on imported steel and aluminum will hurt the 871,000 Americans our members employ -- the largest sector of manufacturing jobs in the U.S.
"Many specialty steel and aluminum materials imported by motor vehicle suppliers are used by hundreds of vehicle parts manufacturers operating in an integrated, complex global supply chain. Suppliers’ access to these specialized products -- which are often only available from one or two sources in the world -- is critical to the industry and our national economy,” she said.
Trade war fears
Fears of a global trade war are mounting as the Trump administration also considers tariffs on U.S. auto imports and duties on $50 billion in Chinese goods. The International Monetary Fund has warned that a wave of protectionist forces are the biggest risk to the global economic outlook.
In imposing the tariffs, President Donald Trump invoked a seldom-used section of a 1960s trade law that allows him to erect trade barriers when imports imperil national security. Trump in March imposed 25 percent duties on imported steel and 10 percent on aluminum, but he gave temporary reprieve to a handful of allies for further talks to take place.
The action was mainly targeted at China over accusations of flooding the global market with cut-rate metals and dragging down prices. The Trump administration has said a global tariff is necessary because China is shipping its steel through other nations.
The White House said in a statement Thursday that those tariffs have already had “major, positive effects” on steel and aluminum workers.
Ross played down the potential negative impact on the U.S. economy from the duties. “For the economy overall, it’s just a very small fraction of 1 percent,” he said in an interview on CNBC.
Republican Sen. Ben Sasse of Nebraska drew a parallel between Trump’s tariffs and trade protectionism during the Great Depression.
"This is dumb,” Sasse said in an emailed statement. “Europe, Canada, and Mexico are not China, and you don’t treat allies the same way you treat opponents. We’ve been down this road before -- blanket protectionism is a big part of why America had a Great Depression. Make America Great Again shouldn’t mean Make America 1929 Again."
NAFTA negotiations
Canada and Mexico also rejected the Trump administration’s suggestion of linking tariff relief to the outcome of ongoing talks to revamp NAFTA.
Canada will respond “appropriately” to any steel and aluminum tariffs, Foreign Minister Chrystia Freeland said on Wednesday, while Mexican Economy Minister Ildefonso Guajardo said earlier this year that retaliation is an option.
Trump imposed the tariffs in March after his U.S. Commerce Department declared that steel and aluminum imports undermine the country’s manufacturing base and threaten national security. The action was mainly targeted at China over accusations of flooding the global market with cut-rate metals and dragging down prices. The Trump administration has said a global tariff is necessary because China is shipping its steel through other nations.
The Mexican government called the steel and aluminum tariffs unjustified and said it will retaliate by imposing import tariffs on U.S. flat steel (hot and cold foil, including coated and various tubes), lamps, pork legs and shoulders, sausage and prepared foods, apples, grapes, blueberries, various cheeses and other goods.
“Steel and aluminum are inputs that contribute to the competitiveness of several strategic and highly integrated sectors in North America, such as automotive, aerospace, electrical and electronic, among others. Mexico is the main buyer of aluminum and the second of steel in the United States,” the government said.
The White House action comes as the Trump administration begins a similar national security investigation into auto imports, which could lead to tariffs. The probe was seen as an attempt to pressure Mexico and Canada over a NAFTA deal. They are the two biggest suppliers of foreign vehicles to the U.S.
NAFTA negotiations are “taking longer than we had hoped. There is no longer a very precise date when they will be concluded,” Ross said on Thursday.
The steel and aluminum levies and auto import probe could play well with Trump voters in Rust Belt states in the lead-up to congressional midterm elections in November.
Automotive News staff contributed to this report.
