President Donald Trump’s increased tariffs on all US steel and aluminum imports took effect Wednesday, ratcheting up a global trade war and drawing swift retaliation from Canada and Europe.
Trump’s action to bulk up protections for American steel and aluminum 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 soda cans. Commerce secretary Howard Lutnick said Trump would impose trade protections on copper as well.
Canada, biggest foreign supplier of steel and aluminum to the US, announced 25 per cent retaliatory tariffs on the metals along with computers, sports equipment and other items worth C$29.8 billion. Canada’s central bank also cut rates to prepare for damage.
US recession fear grows
Trump’s hyper-focus on tariffs has rattled investor, consumer and business confidence in ways that economists worry could cause a US recession and slow the global economy. European Commission said it would impose counter tariffs on up to 26 billion euros ($28 billion) worth of US goods next month. China’s foreign ministry said Beijing would safeguard its interests, while Britain and Australia criticised the blanket tariffs, but both countries ruled out immediate tit-for-tat duties. “We are … negotiating an economic deal which covers and will include tariffs if we succeed, but we will keep all options on the table,” UK PM Keir Starmer said
Dental floss to diamonds
The 27 EU countries are less impacted, for now. 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. EU’s counter-measures target goods like dental floss, diamonds, bathrobes and bourbon which account for a small portion of EU-US trade.
Prepared, stock markets steady
With the tariff hike well flagged in advance, global stocks were barely changed, with data showing cooler US inflation. But the back and forth on tariffs has left companies unnerved, and producers of sportswear, luxury cars and chemicals painted a gloomy picture of consumer and industrial health. JP Morgan’s chief economist forecast 40 per cent chance of a recession this year.
Carney: Ready to sit down
The escalation of the US-Canada trade war occurred as PM Justin Trudeau prepares to hand over power to Mark Carney. “I’m ready to sit down with President Trump at the appropriate time, under a position where there’s respect for Canadian sovereignty,” he said. Canadian officials are due to meet with US officials in Washington Thursday. Trump repeated on social media he wanted Canada as “our cherished Fifty First State”.
