US tariffs of 25 pc on steel, aluminium imports take effect

WASHINGTON: The United States broadened its range of tariffs on Wednesday as sweeping levies on steel and aluminium imports took effect 'with no exceptions or exemptions,' as promised by the White House, despite efforts by other countries to avert them.

President Donald Trump's 25% duties on both metals are expected to increase the cost of producing various goods, from home appliances to automobiles and drink cans, potentially raising consumer prices in the future.

"It wouldn't surprise me to see the tariffs pretty quickly show up in prices," said Clark Packard, a research fellow at the Cato Institute. He noted that auto manufacturing and construction—spanning both residential and commercial buildings—are among the largest users of steel in the United States.

The European Commission announced on Wednesday that it would impose "a series of countermeasures" from April 1 in response to what it described as "unjustified trade restrictions" by the United States. "We deeply regret this measure," said European Commission chief Ursula von der Leyen, adding, "As the US is applying tariffs worth $28 billion, we are responding with countermeasures worth" the equivalent in euros.

Since returning to office, Trump has imposed steep tariffs on major US trading partners, including Canada, Mexico, and China, allowing only a partial rollback for neighbouring countries while planning additional levies from April 2.

The latest duties will heavily impact Canada, which supplies approximately half of US aluminium imports and 20 per cent of its steel imports, according to a recent note by EY chief economist Gregory Daco. Brazil and Mexico are also key suppliers of steel to the US, while the United Arab Emirates and South Korea are major providers of aluminium.

Wednesday's levies build on earlier ones, meaning some steel and aluminium products from Canada and Mexico could face a 50 per cent tariff rate unless they comply with the US-Mexico-Canada Agreement (USMCA).

Uncertainty over Trump's trade policies and fears of a potential recession have unsettled financial markets, with Wall Street indexes falling for a second consecutive day on Tuesday. However, Trump dismissed concerns about his economic management, stating on Tuesday that he does not foresee a downturn and downplaying Wall Street losses.

'Bumpy' Transition

Trump's trade decisions have been marked by volatility, with the president threatening to double the tariff rate on Canadian steel and aluminium to 50 per cent less than a day before the levies were set to take effect. 

Ontario, Canada’s most populous province, had planned to impose an electricity surcharge on three US states in retaliation for earlier US tariffs, prompting a heated response from Trump. However, Ontario withdrew the surcharge following discussions with Washington.

White House spokesman Kush Desai stated that Trump "used the leverage of the American economy" to "deliver a win for the American people." 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 a renewed USMCA ahead of the April 2 reciprocal tariff deadline," according to a joint US-Canada statement.

When asked about Trump's shifting stance on tariffs, White House senior counsellor Peter Navarro described the process as "a negotiation." "It is a transition," he said. "It's going to be at times, perhaps a little bumpy."

Massive Uncertainty

Even before the latest tariffs took effect, manufacturers scrambled to find cost-effective domestic suppliers. The mere threat of protectionism, Packard said, has allowed US steel and aluminium firms to raise their prices. "It's creating massive amounts of uncertainty," he added.

Some US manufacturers using American steel view the tariffs as a positive development, as they have boosted domestic business. However, others warn that tariffs increase the cost of imports while making US-made goods equally expensive.

Daco of EY noted that the new steel and aluminium levies go beyond measures imposed by Trump in 2018, covering a range of finished products in addition to raw steel and aluminium. The higher rate on aluminium imports, combined with existing restrictions, is "likely to make foreign sourcing more expensive across multiple industries."

The lack of exemptions on Wednesday comes despite recent visits to Washington by US partners such as Australia and Japan, who sought exclusions. Australian Prime Minister Anthony Albanese described the tariffs as "entirely unjustified" on Wednesday but stated that his country would not retaliate.

It remains unclear whether Trump will eventually grant relief to some countries or negotiate deals, as he did during his first administration. Looking ahead, Trump has pledged to introduce separate reciprocal levies from April 2 to address trade practices deemed unfair by Washington, raising the possibility of additional products and trading partners being targeted.

By RSS/AFP