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Businesses around the US also warned of fallout, with many manufacturing-heavy companies finding it difficult to plan next steps or determine if Trump will follow through
Published : 12 Feb 2025, 09:43 AM
US President Donald Trump's planned 25% tariffs on steel and aluminium imports would pile on top of other levies on Canadian goods, resulting in a total 50% tariff if threatened duties on all imports from Canada are enacted in March, a White House official said on Tuesday.
Canada has not been told about the additive nature of the tariffs, a Canadian government source told Reuters, adding that it "sounds plausible."
Mexico, Canada and the European Union condemned Trump's metals tariffs on Tuesday and governments around the world braced for even more levies from the new administration amid fears of an escalating global trade war.
Businesses around the United States also warned of fallout, with many manufacturing-heavy companies finding it difficult to plan next steps or determine if Trump will follow through. The tariff hike would reverberate across the supply chain, affecting all businesses that rely on the materials, they said.
Trump signed proclamations late on Monday raising the US tariff rate on aluminum to 25% from his previous 10% rate and eliminating country exceptions and quota deals as well as hundreds of thousands of product-specific tariff exclusions for both metals.
The measures, due to take effect on March 12, will apply to millions of tons of steel and aluminium imports from Canada, Brazil, Mexico, South Korea and other countries that had been entering the US duty free under the carve-outs.
Mexican Economy Minister Marcelo Ebrard called the tariff decision "not justified" and "unfair." He did not say if Mexico planned reciprocal tariffs on steel or aluminium it imports from the United States.
Canadian Prime Minister Justin Trudeau said the tariffs were "unacceptable." Canada's response, if needed, would be firm and clear, he said at an artificial intelligence summit in Paris.
The Canadian Press, citing a senior government official, said Trudeau spoke with US Vice President JD Vance about the impact the steel tariffs would have in Ohio, which Vance previously represented in the US Senate.
Vance was also planning to discuss trade and economic issues with European Commission President Ursula von der Leyen at the Paris summit after she said the 27-nation bloc would take "firm and proportionate countermeasures" to the new tariffs.
READY TO RETALIATE
Von der Leyen said she deeply regretted the US decision, adding that tariffs were taxes that were bad for business and worse for consumers. EU steel exports to the US have averaged about 3 billion euros ($3.1 billion) a year over the past decade.
"Unjustified tariffs on the EU will not go unanswered - they will trigger firm and proportionate countermeasures," she said in a statement.
One option for the EU would be to reactivate the tariffs it imposed in 2018 during Trump's first term, which were suspended under an agreement with his predecessor, President Joe Biden.
The EU tariffs on US products such as bourbon, motorcycles and orange juice are currently suspended until the end of March.
The American Chamber of Commerce to the EU (AmCham EU), representing US companies active in Europe, also criticised the move as harmful to jobs, prosperity and security on both sides of the Atlantic.
"The damage will extend beyond just the steel and aluminium sectors, impacting all businesses that rely on these materials throughout the supply chain," it said in a statement.
COST AND CHAOS
Executives across industries reliant on steel and aluminium imports were scrambling to offset the cost of Trump's move after previous tariff threats from the White House that were later scrapped.
Companies ranging from Coca-Cola and Ford to smaller aluminium, aerospace and appliance firms expect to be affected by Trump's moves, which Ford CEO Jim Farley said have so far added "a lot of cost and a lot of chaos" to American business.
The Coalition of American Metal Manufacturers and Users (CAMMU) said failure to include a workable exclusion process would hurt US manufacturers, and especially small- and medium-sized businesses that were left paying significantly more for inputs to their production.
"Foreign customers are shifting their supply chains away from US producers. Once removed, especially for smaller, family-owned businesses, it is difficult to regain that lost business," the group said.
It said the threat of retaliatory tariffs from key trading partners further threatened US exports and manufacturing jobs, stalling expansion plans and teeing up difficult choices on investments, retention and long-term growth.
Steel imports accounted for about 23% of American steel consumption in 2023, according to American Iron and Steel Institute data, with Canada, Brazil and Mexico the largest suppliers.
Canada accounted for nearly 80% of US primary aluminium imports in 2024.
Trump also will impose a new North American standard requiring steel imports to be "melted and poured" and aluminium to be "smelted and cast" within the region to curb US imports of minimally processed Chinese and Russian metals that circumvent other tariffs.
While China exports only tiny volumes of steel to the US, it is responsible for much of the world's excess steel capacity, according to the US It says subsidised production in China forces other countries to export more and leads to trans-shipment of Chinese steel through other countries into the US to avoid tariffs and other trade restrictions.
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