Latest tariffs imposed as markets reel from a dizzying series of back-and-forth announcements on trade.
United States President Donald Trump’s sweeping tariffs on steel and aluminium imports have taken effect and are set to escalate tensions with US trading partners.
The 25 percent tariffs on all imports of the metals into the US came into effect on Wednesday as governments and markets around the world reeled from a dizzying series of back-and-forth announcements on trade made by Trump in recent days.
The move drew swift retaliation from Canada and the European Union.
Canada, the biggest foreign supplier of steel and aluminium to the US, announced 25 percent retaliatory tariffs on goods including steel, aluminium, computers, sports equipment and other products worth 29.8 billion Canadian dollars (US$20.7bn) in total.
The European Commission, the executive arm of the EU charged with coordinating trade matters, said it would impose counter tariffs on up to 26 billion euros (US$28bn) of US goods – often with more symbolic than economic impact – from next month.
Nevertheless, commission President Ursula von der Leyen told reporters she had tasked Trade Commissioner Maros Sefcovic to resume talks with US officials on the matter.
China’s Ministry of Foreign Affairs said Beijing would take all necessary measures to safeguard its rights and interests while Japanese Chief Cabinet Secretary Yoshimasa Hayashi said the move could have a major impact on US-Japan economic ties.
Close US allies Britain and Australia criticised the blanket tariffs with Australian Prime Minister Anthony Albanese saying the move was “against the spirit of our two nations’ enduring friendship”. However, both countries ruled out immediate tit-for-tat duties.
‘America first’
On Tuesday, Trump threatened to impose 50 percent tariffs on Canadian aluminium and steel before reversing course just hours later.
Trump’s senior economic adviser, Peter Navarro, confirmed in an interview with the US business news channel CNBC later on Tuesday that the tariffs would not be imposed after the Canadian province of Ontario agreed to temporarily suspend a surcharge on electricity exports to three US states.
Trump had cited Ontario Premier Doug Ford’s decision to impose the surcharge on electricity exports to Minnesota, Michigan and New York in his Truth Social post announcing the tariffs hike.
“Just tamp it down, please, over there,” Navarro said in his CNBC interview, addressing Canada.
Trump last week imposed tariffs on Canada, Mexico and China before announcing he would delay some of the duties until April 2.
The US president has also flagged plans for “reciprocal” tariffs on the European Union, Brazil and South Korea from early next month.
The uncertainty surrounding Trump’s “America first” agenda has roiled stock markets as investors struggle to gauge whether his tariffs are here to stay or a bargaining tactic.
The US benchmark S&P 500 fell 0.8 percent on Tuesday, after tumbling 2.7 percent on Monday.
The tech-heavy Nasdaq Composite dipped 0.2 percent, following a 4 percent slump the previous day.
Although they apply to all countries, the latest tariffs will have a significant impact on Canada because the country supplies about 50 percent of US aluminium imports and 20 percent of its steel imports.
Other major steel suppliers to the US include Brazil and Mexico while the United Arab Emirates and South Korea are among the top suppliers of aluminium.
US-Canada relations have been especially strained under Trump, who has repeatedly threatened to annex the country in addition to launching successive trade salvoes.
Canada retaliates
Many Canadians are boycotting US products and calling on the government to reduce the country’s economic dependence on the US.
Announcing his aborted electricity surcharge on Monday, Ford told reporters that his province powers 1.5 million US homes and businesses.
The surcharge, the premier said, would cost families and businesses as much as 400,000 Canadian dollars (US$276,000) per day.
“Let me be clear, I will not hesitate to increase this charge. If necessary, if the United States escalates, I will not hesitate to shut the electricity off completely,” Ford said.
On Tuesday, Mark Carney, the new leader of Canada’s governing Liberal Party and the country’s next prime minister, slammed Trump’s plan to increase tariffs on steel and aluminium as “an attack on Canadian workers, families, and businesses”.
“My government will ensure our response has maximum impact in the US and minimal impact here in Canada, while supporting the workers impacted,” Carney, who is set to be sworn in as prime minister in the coming days, wrote on social media.
“My government will keep our tariffs on until the Americans show us respect and make credible, reliable commitments to free and fair trade.”
Canada and the US are major trading partners. US imports from its northern neighbour totalled $412.7bn in 2024, according to the Office of the US Trade Representative. US exports to Canada that year were worth $349.4bn.
Canada tops the list of foreign suppliers of both steel and aluminium to the US with exports worth $19.5bn last year, according to data from S&P Global.
“While steel represents a significant portion of total US imports, the country depends far more on Canadian aluminum to meet domestic demand,” the Canadian Chamber of Commerce said in a recent factsheet.
It said US tariffs on steel and aluminium could lead to job losses in Canada while retaliatory measures by the Canadian government could raise prices for consumers.
‘Worst trade policy’
Despite concerns that a prolonged trade war with Canada could also raise prices for Americans and hurt the US economy, the Trump administration has defended its tariff policy as necessary to close a trade deficit with Canada.
In a Truth Social post on Tuesday, Trump warned Canada that if it did not drop its tariffs on US goods, his administration would increase planned reciprocal levies set to take effect in early April.
That “will, essentially, permanently shut down the automobile manufacturing business in Canada”, Trump said.
“Those cars can easily be made in the USA! Also, Canada pays very little for National Security, relying on the United States for military protection. We are subsidizing Canada to the tune of more than 200 Billion Dollars a year. WHY??? This cannot continue.”
Larry Summers, a veteran economist and former US Treasury secretary, slammed Trump’s proposed tariffs as his “worst trade policy yet”.
“Increasing the price of key inputs for the US manufacturing industries – who employ 10 million people – is what a US adversary would do,” Summers wrote on X.
“It is a self-inflicted wound to the US economy that we cannot afford at a moment when recession risks are rising.”
