Trump hits back after retaliation to steel and aluminium tariffs

Following the imposition of tariffs on imported steel and aluminum by U.S. President Donald Trump, and facing retaliation from the EU and Canada, he has pledged to take further tariff measures. This move signals a further escalation of the trade war, triggering concerns in financial markets about its impact on the economies and consumers of multiple countries, including the United States. The long-term effects of these tariffs could be detrimental to global trade relations.

Trump stated that he would "certainly" respond to these countermeasures, reiterating his warning that he would announce "reciprocal" tariffs on countries around the world next month. "What they charge us, we're going to charge them," he said, indicating a tit-for-tat approach to international trade. This strategy could lead to a prolonged period of trade disputes and economic uncertainty.

The Trump administration had previously taken action to expand the scope of tariffs on steel and aluminum, imposing a universal 25% tariff on imported goods and eliminating exemptions previously granted to some countries' shipments by the United States. Prior to this, Trump also ordered an increase in tariffs on goods imported from China to the United States to at least 20%. Furthermore, Trump has threatened to impose tariffs on a range of more specific goods, including copper, lumber, and automobiles. Such aggressive trade policies are designed to protect domestic industries, but they risk alienating trading partners.

Canadian and European leaders have called the new metal tariffs unjustified and have imposed their own tariffs on a range of U.S. products. Other major U.S. metal suppliers, including the UK, Australia, Mexico, and Brazil, have refrained from taking any direct retaliatory action for the time being. UK Prime Minister Keir Starmer stated, "Like everyone else, I am disappointed with the global steel and aluminum tariffs, but we will take a pragmatic approach." He added, "If successful, we are negotiating an agreement that covers tariffs. But we will keep all options open." This cautious approach reflects the complex considerations involved in responding to trade disputes.

Canada has stated that, starting Thursday, it will impose a 25% tariff on nearly C$30 billion (US$20 billion; £16 billion) worth of U.S. products, including steel, computers, and sports equipment. The EU has stated that, starting April 1, it will raise tariffs on up to €26 billion (US$28 billion; £22 billion) worth of U.S. goods, including boats, bourbon whiskey, and motorcycles. European Commission President Ursula von der Leyen stated that the response was intended to be "forceful but proportionate," adding that the EU was "ready to engage in meaningful dialogue." The EU's measured response indicates a desire to de-escalate the trade tensions while protecting its own interests.

"Tariffs are taxes. They are bad for business, and even worse for consumers," von der Leyen warned, saying that economic disruption could jeopardize jobs and drive up prices. "Nobody needs this – neither in the EU nor in the U.S." She emphasized the potential negative consequences of a prolonged trade war, highlighting the importance of finding a resolution through negotiation.

Trump has stated that he hopes to boost U.S. steel and aluminum production in the long run, but critics say that, in the short term, imposing tariffs on metal imports will raise prices for U.S. consumers and weaken economic growth. According to a letter seen by Reuters, major packaged food producers, including Quaker Oats and Folgers Coffee, have asked Trump for targeted tariff exemptions for imported goods such as cocoa and fruits. PepsiCo, Conagra, and J.M. Smucker Co. also joined in the letter, issued by trade group Consumer Brands Association, requesting the president to exempt raw materials not available within the United States. These companies are concerned about the impact of tariffs on their supply chains and profitability.

Reuters reported that imported goods such as coffee, oats, cocoa, spices, tropical fruits, and tinplate steel used in certain food and household products were listed as goods not domestically available. Import tariffs are also expected to reduce demand for non-U.S. made steel and aluminum, which is a blow to metal manufacturers elsewhere. The EU estimates that the latest U.S. tariffs affect about 5% of its total exports to the U.S., while the U.S. is the destination for about 90% of Canada's steel and aluminum exports. These figures highlight the significant impact of the tariffs on global trade flows.

U.S. stocks were mixed on Wednesday after experiencing sharp declines for two consecutive days. The Dow Jones Industrial Average closed down 0.2%, the S&P 500 rose nearly 0.5%, and the Nasdaq Composite rose 1.2%. While meeting with Irish Prime Minister Micheál Martin at the White House, Trump stated that he did not intend to back down from the trade war, saying that he was "not satisfied" with the EU's trade policies. He cited concerns about legal penalties imposed on Apple and rules that he claimed disadvantaged U.S. agricultural products and automobiles. Trump's remarks suggest a continued commitment to his protectionist trade agenda.

"They may be doing what they're supposed to be doing for the EU, but it really does create malice," he said. He reiterated his threat to impose tariffs on European automobiles, adding, "We will win that financial war." Trump's confidence in winning the trade war reflects his belief that the U.S. has the upper hand in trade negotiations, but the long-term consequences of such a conflict remain uncertain.