Yahoo Finance Trade war fears rise as countries hit by Trump steel tariffs retaliate
A global trade war is looming after countries hit by US tariffs on steel and aluminium vowed to retaliate.
The EU, Canada and Mexico learned yesterday that they will not be exempted from the decision of US President Donald Trump to slap tariffs of up to 25 per cent on metal imports.
All three have said they will strike back with tariffs on US exports and suggested they may coordinate their actions in a bid to bring the US administration back to negotiations.
International Trade Secretary Liam Fox said: “It would be a great pity if we ended up in a tit-for-tat trade dispute with our closest allies.”
The European Commission, which is negotiating on behalf of the UK, has been in intensive negotiations with the US in a bid to avoid such a scenario.
MORE: EU declares ‘dark day’ after being hit with Trump’s steel tariffs
The decision to impose the tariffs was made by US Commerce Secretary Wilbur Ross from Paris, where he had been meeting EU negotiators.
Commission President Jean-Claude Juncker said the bloc had been left with “no choice” but to impose its own duties on US products after being targeted.
“What they can do, we’re able to do exactly the same,” he said yesterday after learning of President Trump’s decision when he was passed a note halfway through a speech.
The Commission will hike duties on 322 US products, including jeans, bourbon whiskey, peanut butter and motorbikes. It is expected to cost US businesses some £2.4bn.
Canada, which is the largest supplies of steel to the US, has announced retaliatory worth £9.6bn and Mexico said it would match US tariffs by raising duties on its farm and industrial exports.
“The American administration has made a decision today that we deplore, and obviously is going to lead to retaliatory measures, as it must,” said Canadian President Justin Trudeau.
UK manufacturers exported more than £300m worth of steel to the US last year.
They will be “hit hard” by the new US tariffs, according to UK Steel Director Gareth Stace.
Across the EU, the tariffs are expected to affect £5.6bn worth of steel exports.
President Trump’s decision to impose the tariffs was provoked by a flood of subsidised Chinese steel on the world market, which has challenged the sustainability of the industry in the West.
MORE: EU’s fire and fury over Trump’s delaying tactics on steel tariffs
He signed-off the new tariffs surrounded by US steel workers who are supportive of his decision.
But Luis Colunga, general secretary of the Industiall union which represents European steel workers, said: “The issues facing American workers are the same ones facing European workers: global overcapacity and unfair state aid.
“It is completely unjust that European workers are being punished for a global problem.”
As well as facing new tariffs, European steel producers face a double blow as steel that would have been bound for the US floods into Europe.
The EU has pledged to introduce safeguarding measures to stop this happening in the coming weeks.
