The 25% duty on steel and aluminium imports is a major hit to some of the US's top trading partners ( Reuters )
US President Donald Trump has implemented tariffs on steel and aluminum imports, which is expected to worsen relations with some of the country's biggest trading partners.
The European Union responded immediately, declaring that it would impose counter-tariffs on US imports worth billions of euros.
As US markets plummeted on Monday and Tuesday due to recession fears, Trump expects the tariffs will increase US steel and aluminum output. However, detractors claim the tariffs will raise prices for US consumers and hinder economic progress.
Trump changed his mind on Tuesday about increasing tariffs on Canada, specifically in reaction to an electricity fee imposed by Ontario.
Due to the tariffs, US companies who wish to import steel and aluminum will be required to pay a 25% levy.
On Wednesday, the EU responded by announcing retaliatory duties on imports valued at €26 billion (£22 billion).
They will be fully implemented on April 13 after being partially introduced on April 1.
According to European Union President Ursula von der Leyen, tariffs are "bad for business and worse for consumers," and she "deeply regrets this measure."
"They are causing supply chain disruptions. They cause economic uncertainty. Prices are rising, jobs are in jeopardy, and neither the US nor the EU need that.
She stated that the EU is still "open to negotiations" and that its response was "strong but proportionate."
The American Iron and Steel Institute (AISI), a trade association for American steel producers, applauded the tariffs, claiming they would increase domestic steel production and generate jobs.
Kevin Dempsey, the group's president, claimed that the action ended a system of quotas, exclusions, and exemptions that shielded foreign producers from tariffs.
"AISI applauds the president's actions to restore the integrity of the tariffs on steel and implement a robust and reinvigorated program to address unfair trade practices," said Dempsey.
Canada, Mexico, and Brazil are some of the biggest suppliers of steel and aluminum to the United States, which is a major importer of these metals.
"No exceptions"
The action was swiftly reacted to by other nations as well.
Jonathan Reynolds, the trade secretary, expressed disappointment and stated that "all options were on the table" in order to respond in the best interests of the country.
"Entirely unjustified" is how Australian Prime Minister Anthony Albanese described the Trump administration's decision to proceed with the new tariffs.
Australia will not impose retaliatory penalties, according to Albanese, who had been attempting to obtain an exemption from the levies, as doing so would only result in higher prices for Australian customers.
Jonathan Wilkinson, Canada's energy minister, told CNN that his nation would strike back but that it does not want to increase hostilities.
Canada is the biggest supplier of steel and aluminum to the United States and is one of America's closest trading partners.
Trump slapped import duties of 10% on aluminum and 25% on steel in 2018, during his first term as president. However, numerous countries subsequently negotiated carve-outs.
The Trump administration has made it clear that there won't be any exceptions this time.
Steel from Britain
The US decision was deemed "hugely disappointing" by Gareth Stace, director general of industry association UK Steel.
According to him, several steel business contracts have already been canceled or placed on hold, and US consumers would be required to pay an additional £100 million in taxes annually.
He pushed Trump to cooperate with the UK rather than oppose it, saying he shared his worries about cheap steel flooding the market.
"Surely President Trump realises that we are his friend, not his foe, and our valued customers in the US are our partners, they're not our enemies," he stated.
Tariffs will "hit us hard" at a time when the UK steel sector is "struggling" with energy prices and steel imports are increasing.
The government must "act decisively to protect the steel industry" because it is "a matter of national security," according to the Unite union.
According to Sharon Graham, general secretary of Unite, regulations should be put in place "to ensure that the public sector always buys UK produced steel."
Fears of a recession
The Brooklyn-based business Linda Tool, which produces parts for the aerospace sector, is owned and operated by Michael DiMarino. He uses steel in all of his creations, a large portion of which is produced in American mills.
I pass on price increases to my clients if I have them. Although he supports the need for more production in the US, Mr. DiMarino cautioned that the president's actions could backfire. "They have higher prices, they pass it on to the consumer," he said.
These concerns were also expressed by the American Automotive Policy Council, which represents automakers like Ford, General Motors, and Stellantis.
They "are concerned that specifically revoking exemptions for Canada and Mexico will add significant costs" to suppliers to automakers, according to Matt Blunt, president of the organization.
The US steel and aluminum industries may benefit from the tariffs, but the overall economy may suffer, according to some experts.
The former Commerce Department official Bill Reinsch, who is currently at the Center for Strategic and International Studies, stated, "It protects [the steel and aluminum] industries but hurts downstream users of their products by making them more expensive."
Trump's refusal to rule out the possibility of an economic recession this week exacerbated the selloff in US and international stock markets caused by fear of the economic consequences of his trade tariffs.
In a report, Oxford Economics, a research organization, said it had reduced its growth prediction for the United States from 2.4% to 2% for the year and made even more drastic changes to its view for Canada and Mexico.
"Despite the downgrade, we still expect the US economy to outperform the other major advanced economies over the next couple of years," the report stated.
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