Trade War Escalates: EU Hits Back as US Steel, Aluminum Tariffs Take Effect

By Staff, Agencies

The United States expanded its range of tariffs on Wednesday as broad duties on steel and aluminum imports came into force “with no exceptions or exemptions,” as pledged by the White House—despite multiple countries’ efforts to avoid them.

US President Donald Trump’s decision to impose 25 percent tariffs on both metals is expected to increase production costs for various goods, including home appliances, automobiles, and beverage cans, potentially driving up consumer prices.

Since returning to office, Trump has imposed significant tariffs on key US trading partners, including Canada, Mexico, and China. While he permitted a partial rollback for Canada and Mexico, he has also vowed to introduce additional duties beginning April 2.

The latest round of tariffs will again hit Canada particularly hard, as it supplies around 50 percent of US aluminum imports and 20 percent of its steel, according to an analysis by EY chief economist Gregory Daco. Other major steel exporters to the US include Brazil and Mexico, while the United Arab Emirates and South Korea are key aluminum suppliers.

With these new duties stacking atop previous tariffs, some steel and aluminum imports from Canada and Mexico could now face a 50 percent tariff unless they comply with the US-Mexico-Canada Agreement [USMCA].

Meanwhile, Trump dismissed concerns about his economic strategy, stating on Tuesday that he does not anticipate a downturn and downplaying the market declines. Trump’s trade policies have been marked by unpredictability. Less than 24 hours before the new tariffs took effect, he threatened to double the rate on Canadian steel and aluminum to 50 percent.

The move followed Canada’s Ontario province announcing an electricity surcharge on three US states in retaliation for earlier American tariffs. Trump reacted angrily, escalating tensions by suggesting plans to annex Canada.

Ontario Premier Doug Ford, US Commerce Secretary Howard Lutnick, and US Trade Representative Jamieson Greer are scheduled to meet in Washington on Thursday to discuss the "renewed USMCA ahead of the April 2 reciprocal tariff deadline," according to a joint US-Canada statement.

When asked about Trump’s shifting tariff policies, White House senior counselor Peter Navarro characterized the process as “a negotiation".

“It is a transition,” he said. “It’s going to be at times, perhaps a little bumpy.”

Even before the latest tariffs were implemented, manufacturers had been scrambling to secure cost-effective domestic suppliers.

Packard noted that “the mere threat of protectionism” has already allowed US steel and aluminum companies to hike their prices, creating “massive amounts of uncertainty.”

While some American manufacturers who use domestically produced steel see the tariffs as beneficial to their business, others warn that they merely increase import costs while making US-made products equally expensive.

In Parallel, the European Union announced on Wednesday that it will impose counter-tariffs on US goods worth 26 billion euros [$28.33 billion] starting next month, in retaliation to US tariffs on steel and aluminum.

The European Commission stated that the suspension of tariffs on US products will end on April 1, and a new package of countermeasures will be introduced by mid-April.

European Commission President Ursula von der Leyen said in a statement, “This matches the economic scope of the US tariffs. Our countermeasures will be introduced in two steps. Starting with 1 April and fully in place as of 13 April.”

“We are ready to engage in meaningful dialogue. I have entrusted Trade Commissioner Maros Sefcovic to resume his talks to explore better solutions with the US,” von der Leyen added.

"As of this morning the United States is applying a 25% tariff on imports of steel and aluminum. We deeply regret this measure. Tariffs are taxes. They are bad for business, and even worse for consumers. These tariffs are disrupting supply chains." Leyen wen on saying.

The European Union must act to protect consumers and business. The countermeasures we take today are strong but proportionate. As the US are applying tariffs worth 28 billion dollars, we are responding with countermeasures worth €26 billion," von der Leyen stressed in a statement.

The European Commission also issued a statement announcing retaliatory measures targeting US goods worth approximately 18 billion euros [$19.6 billion], set to take effect in mid-April.

Starting April 1, the EU will reinstate the rebalancing measures from 2018 and 2020, and a new package of countermeasures will be implemented in mid-April.