Canada and EU Respond to Trump's Steel and Aluminum Tariffs

Brussels: Major trading partners quickly retaliated against President Donald Trump's increased tariffs on aluminum and steel imports, imposing their own high tariffs on a variety of US goods, including textiles, water heaters, beef, and bourbon.

On Wednesday, Canada, as the largest supplier of steel and aluminum to the US, announced it would apply reciprocal tariffs of 25 percent on steel products. Canada will also increase taxes on various US goods such as tools, computers, servers, display monitors, sports equipment, and cast-iron products.

Meanwhile, the European Union (EU) has decided to impose increased tariffs on American imports, including beef, poultry, bourbon, motorcycles, peanut butter, and jeans.

The combined new tariffs are predicted to cost companies billions, increasing uncertainty in two of the world’s significant trade relationships. Businesses will have to either absorb the losses, which could lead to reduced profits, or likely pass these costs onto consumers, resulting in higher prices.

European Commission President Ursula von der Leyen stated, "Prices will go up, in Europe and the United States, and jobs are at stake." She also added, "We deeply regret this measure. Tariffs are taxes. They are bad for business, and even worse for consumers."

The EU’s new tariffs target key products from US states that support the Republican Party, such as beef and poultry from Kansas and Nebraska, and wood products from Alabama and Georgia. Additionally, states like Illinois, the leading producer of soybeans in the US, are also affected by these tariffs.

Craft distillers have expressed disappointment as they feel impacted by the trade conflict. Chris Swonger, head of the Distilled Spirits Council, said, "The EU move is deeply disappointing and will severely undercut the successful efforts to rebuild US spirits exports in EU countries." After an earlier set of tariffs were suspended, US whisky exports to the EU surged 60 percent over three years.

Is there a chance for negotiation?

Von der Leyen emphasized that the EU is "always open to negotiation." Canada's incoming Prime Minister Mark Carney expressed willingness to meet with Trump if there is mutual respect for Canadian sovereignty and a commitment to a comprehensive trade approach.

Carney, who is set to take office soon, noted that improving trade relationships would benefit workers in both nations, stating that "the greatest economic and security partnership in the world is renewed, relaunched. That is possible."

He also mentioned that, especially amidst geopolitical and economic uncertainties, it is not beneficial for either side to impose tariffs.

The American Chamber of Commerce to the EU echoed this sentiment, stating that the tariffs and counter-tariffs will harm jobs, prosperity, and security on both sides of the Atlantic. They urged both sides to de-escalate tensions and pursue a negotiated solution as soon as possible.

What happened in the past?

Trump previously imposed similar tariffs on EU steel and aluminum during his first term, prompting the EU to retaliate. They raised tariffs on a range of US products including motorcycles, bourbon, and jeans. This time around, the EU's actions will unfold in two phases. The first set of tariffs will come back into effect from April 1, targeting products that were previously taxed from 2018 to 2020 but had been suspended under the Biden administration. The second wave of tariffs, which will be introduced on April 13, will focus on approximately $19.6 billion worth of US exports to the EU.

EU Trade Commissioner Maroš Šefčovič recently visited Washington to discuss avoiding these tariffs and emphasized that the EU is not the root cause of the issue. He said, "I argued to avoid the unnecessary burden of measures and countermeasures, but you need a partner for that. You need both hands to clap."

Starting at 12:01 AM on Thursday, Canada will implement the 25 percent tariffs on steel products valued at approximately 12.6 billion Canadian dollars ($8.7 billion) and on aluminum products worth 3 billion Canadian dollars ($2 billion), in addition to taxes on various imported US goods totaling 14.2 billion Canadian dollars ($9.9 billion). In total, this equates to 29.8 billion Canadian dollars ($20.6 billion).

These new tariffs will be in addition to Canada's existing tariffs on $20.8 billion of US imports, which were initiated in response to earlier tariffs imposed by Trump.

Impact on the EU steel industry

The EU could face a potential loss of around 3.7 million tons in steel exports, as reported by the European steel association Eurofer. The US represents the second largest export market for EU steel producers, making up 16 percent of their total exports. The EU estimates that the annual trade volume between the US and the EU is around $1.5 trillion, accounting for roughly 30 percent of global trade.

trade, tariffs, exports