Canada and EU retaliate against Trump tariffs
Canada, the biggest foreign supplier of steel and aluminium to the United States, has retaliated with 25 per cent tariffs, as the EU places counter-sanctions on more everyday items.
Canada and Europe have taken swift action against the US in retaliation to tariffs on steel and aluminium that came into effect on Thursday (AEDT).
US President Donald Trump slapped 25 per cent tariffs on the imports, which extend to hundreds of downstream products, from nuts and bolts to bulldozer blades and soft drink cans.
US Commerce Secretary Howard Lutnick said nothing could stop the tariffs — which also affect Australia — and Trump would impose similar protections on copper.
Canada quickly announced 25 per cent retaliatory tariffs on goods including steel, aluminium, computers, sports equipment and other products worth $C29.8 billion ($32.8 billion) in total.
Canada is the biggest foreign supplier of steel and aluminium to the United States.
Trump initially threatened to double Canada’s duty to 50 per cent, but backed off after Canada’s Ontario province suspended a move to impose a 25 per cent surcharge on electricity exports to some US states.
The European Union said it would impose counter tariffs on up to €26 billion ($45 billion) worth of US goods – often with more symbolic than economic impact – from next month.
Germany’s Kiel Institute estimated a hit to EU output of only 0.02 per cent, because “only a small fraction” of the targeted products are exported to the US.
The EU’s counter-measures include dental floss, diamonds, bathrobes and bourbon – goods that make up only a small portion of the giant EU-US commercial relationship.
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Asked about the EU’s retaliatory move, Trump said on Thursday (AEDT) that he would respond in kind.
“The European Union treats us very badly,” said Trump, adding that the 27-member bloc’s reaction was creating “ill will”.
“Whatever they charge us, we’re going to be charging them,” he said.
“Nobody can complain about that. Whatever it is, no matter what it is, if they charge us 25, or 20 or 10 per cent or 2 per cent or 200 per cent – then that’s what we’re charging them.
“I don’t know why people get upset about that because there’s nothing more fair than that.”
Trump had promised to consider an exemption for Australia, but in the end ruled out carveouts for any nation.
Australia’s Prime Minister Anthony Albanese said the US tariffs were “against the spirit of our two nations’ enduring friendship”, but ruled out immediate tit-for-tat duties.
Australia sends about $800 million worth of steel to the US each year, but it only represents 0.2 per cent of exports.
There are fears that Trump’s breaking of the US-Australia free trade agreement could pave the way for more tariffs, such as on beef, which is Australia’s biggest export to the US.
On Wednesday night, Foreign Minister Penny Wong said Australia had requested another phone call with Trump and would continue to push for an exemption.
‘Art of the steal’
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A union representing workers from Australia’s largest steel manufacturer and supplier said Trump was motivated to “steal our industry”.
“He knows that steel is such a foundational industry and if he moves on that and other companies and industries around the world, he increases and consolidates his power and weakens that of his competitors,” said South Coast Labour Council secretary Arthur Rorris.
Rorris’s union includes workers from BlueScope’s Port Kembla Steelworks in the NSW Illawarra.
He said the tariffs meant Australia had to back its domestic steelmaking industry further to counteract the moves from the Trump administration.
“While Trump is focusing on taxing steel, our job should be on buying it. If we do that, we secure a steel industry. If we don’t do that, then Trump wins,” he said.
“We have more than enough of a market here to use every last ounce of steel made at our steelworks. We actually have a domestic market big enough to absorb our steel production.”
While Australia secured a tariff exemption during Trump’s first term in office, no exemptions were provided this time.
Albanese said the federal government would continue to press the case to the US for the tariffs to be removed.
“Such a decision by the Trump administration is entirely unjustified,” he said in Sydney.
Trump’s hyper-focus on tariffs has rattled investor, consumer and business confidence in ways that economists worry could cause a US recession and further lag on the global economy.
China’s foreign ministry said Beijing would take all necessary measures to safeguard its rights and interests, while Japan’s Chief Cabinet Secretary Yoshimasa Hayashi said the move could have a major impact on US-Japan economic ties.
The other countries most affected by the tariffs are Brazil, Mexico and South Korea, which all enjoyed some level of exemptions or quotas.
The 27 countries of the EU are less impacted, for now.
France’s Europe Minister Benjamin Haddad warned, however, that the EU could expand its response to include digital services or intellectual property.
The back-and-forth on tariffs has left companies unnerved, upending industries from cars to energy.
“Nearly everyone in the economy is struggling to comprehend wild swings in Washington policies, and their implications for everyday decisions,” said Stephen Dover, Franklin Templeton’s chief market strategist.
US steel producers welcomed the move, noting Trump’s 2018 tariffs had been weakened by numerous exemptions.
The escalation of the US-Canada trade war occurred as Prime Minister Justin Trudeau prepares to hand over power to his successor Mark Carney, who won the leadership race of the ruling Liberals last weekend.
Trump repeated on social media he wanted Canada as “our cherished Fifty First State”.
