The European Union has announced the implementation of counter tariffs on US goods valued at €26 billion (approximately $28 billion) beginning next month. This move marks a significant escalation in the ongoing global trade tensions, prompted by the blanket tariffs imposed by the United States on steel and aluminum imports.
In response to these trade dynamics, US President Donald Trump has activated increased tariffs of 25% on all steel and aluminum imports, which took effect as previous exemptions and duty-free quotas expired. The European Commission plans to lift its current suspension of tariffs on American products starting April 1, and by mid-April, it will introduce a comprehensive package of countermeasures targeting US goods.
The products affected by these suspended tariffs range from boats to bourbon and motorbikes. The EU has announced a two-week consultation period to identify further product categories that may be subject to these tariffs.
The proposed targets for these counter tariffs include both industrial and agricultural commodities—encompassing steel and aluminum alongside textiles, home appliances, plastics, poultry, beef, eggs, dairy, sugar, and vegetables.
European Commission President Ursula von der Leyen emphasized, “Our countermeasures will be introduced in two steps. Starting with April 1 and fully in place as of April 13.” She further stated, “We are ready to engage in meaningful dialogue. I have entrusted Trade Commissioner Maroš Šefčovič to resume his talks to explore better solutions with the US.”
Trump’s initiative to bolster protections for US steel and aluminum producers effectively reinstates global tariffs of 25% on all imports of these metals and extends the duties to a wide array of downstream products, from nuts and bolts to bulldozer blades and cans. This culminated in a dramatic lead-up to the tariff deadlines, during which Trump threatened to double the duty on Canadian steel and aluminum exports to the US to 50%. However, he retracted this threat following negotiations with Ontario Premier Doug Ford, who had previously aimed to impose a surcharge on electricity exports to US states.
In the wake of these developments, Premier Ford indicated plans to travel to Washington for discussions with US officials, including Commerce Secretary Howard Lutnick, about revising the US-Mexico-Canada Agreement (USMCA) on trade. Despite the tumultuous financial markets reacting to Trump’s extensive tariff strategy, Trump’s decision to uphold the 2018 national security tariffs on steel and aluminum remains intact.
A spokesperson for the White House touted the pressure on Canada as a “win” for the American people. The US Customs and Border Protection agency decisively halted imports eligible for duty-free entry under quota agreements long before the midnight deadline, urging shippers to file necessary documentation promptly.
The reinstated tariffs have been positively received by US steel producers, as they aim to close loopholes that previously diluted the impact of the original 2018 tariffs. “By closing loopholes in the tariff that have been exploited for years, President Trump will again supercharge a steel industry that stands ready to rebuild America,” remarked Philip Bell, President of the Steel Manufacturers Association. He further asserted, “The revised tariff will ensure that steelmakers in America can continue to create new high-paying jobs and make greater investments knowing that they will not be undercut by unfair trade practices.”
Countries like Canada—previously the largest foreign supplier of steel and aluminum to the US—Brazil, Mexico, and South Korea have been significantly impacted, many of them having enjoyed various exemptions or quotas.
This latest fallout in US-Canada trade relations coincides with Canadian Prime Minister Justin Trudeau’s impending leadership transition to Mark Carney, who recently won the ruling Liberal party’s leadership race. As Carney prepares to assume office, he has indicated he will refrain from discussions with Trump until officially sworn in. Trump has maintained a social media presence expressing a desire for Canada to become the “cherished Fifty First State.”
Meanwhile, Canadian Energy Minister Jonathan Wilkinson indicated to Reuters that Canada could consider implementing non-tariff measures, such as restricting oil exports to the US or imposing export duties on minerals if US tariffs remain in place.
Canada currently exports approximately 4 million barrels of crude oil to the US daily, primarily through pipelines to Midwest refineries. Additionally, there are discussions around potential Canadian tariffs on US ethanol as a retaliatory measure.
While much of US-Canada trade continues to be duty-free under the USMCA agreement signed by Trump in 2020, he has expressed ongoing concerns regarding Canada’s high tariff rates on dairy products.
In recent developments, Ottawa secured a month’s reprieve for USMCA-compliant exports from Trump’s general 25% tariffs linked to fentanyl trafficking. However, Canada is also on the verge of facing reciprocal tariffs from the US that aim to elevate US tariffs, bringing them in alignment with those of other countries.
Canada’s strategic advantage in aluminum production, bolstered by its abundant hydropower resources, has afforded it a dominant position in the US aluminum market, despite US smelters once safeguarded by Trump’s tariffs being idled. Although China is the second-largest supplier of aluminum and its derivatives, it is already contending with high tariffs due to perceived unfair trade practices and a recent 20% tariff imposed in connection with fentanyl trafficking.
Trump’s fixation on tariffs since his inauguration has generated considerable uncertainty, straining investor, consumer, and business confidence. This has raised concerns among economists about a potential recession. A recent survey reflecting small business sentiment revealed declining confidence for the third consecutive month, wiping out the optimism that initially followed Trump’s election. Similarly, a survey by the New York Federal Reserve indicated growing consumer pessimism regarding finances, inflation, and the job market.
As the trade landscape continues to shift along these global lines, staying attuned to the developments will be essential for all stakeholders involved.
Edited By Ali Musa
Axadle Times International – Monitoring
