The European Union plans to implement counter-tariffs on €26 billion ($28 billion) worth of US products starting next month, as announced by the European Commission, escalating a global trade conflict in retaliation for US tariffs on steel and aluminum.
President Donald Trump’s increased tariffs of 25% on all steel and aluminum imports have now taken effect following the expiration of previous exemptions, duty-free quotas, and product exclusions.
The European Commission disclosed that it will terminate the current suspension of tariffs on US goods on April 1 and will introduce a new package of countermeasures related to US products by mid-April.
The previously suspended tariffs cover a variety of items, including boats, bourbon, and motorbikes, and the EU has initiated a two-week consultation process to consider additional product categories.
Potential target products encompass both industrial and agricultural items, such as steel and aluminum, textiles, home appliances, plastics, poultry, beef, eggs, dairy, sugar, and vegetables.
“Our countermeasures will be implemented in two phases, beginning on April 1 and fully enforced by April 13,” stated Ursula von der Leyen, President of the European Commission.
“We are open to engaging in constructive dialogue. I have tasked Trade Commissioner Maroš Šefčovič with resuming discussions to seek better solutions with the US,” she added.
Trump’s move to bolster protections for US steel and aluminum producers reinstates effective global tariffs of 25% on all imports of these metals, extending the duties to hundreds of downstream products made from them, ranging from nuts and bolts to bulldozer blades and cans.
As the tariff deadline approached, tensions rose when Trump threatened to double the duty to 50% on Canadian steel and aluminum exports to the US.
Donald Trump’s tariffs move was welcomed by US steel producers
However, Trump reevaluated this stance after Ontario Premier Doug Ford agreed to postpone his province’s decision to impose a 25% surcharge on electricity exports to Minnesota, Michigan, and New York until the previous US tariffs were lifted.
Ford announced he would travel to Washington the next day with Canadian Finance Minister Dominic LeBlanc for discussions with Commerce Secretary Howard Lutnick and other Trump officials regarding modifications to the US-Mexico-Canada Agreement on trade.
This incident contributed to volatility in the US financial markets, which were already sensitive to Trump’s extensive tariff initiatives, yet it did not alter his original plans to reinforce the Section 232 national security tariffs on steel and aluminum that were imposed in 2018 during his initial term.
A White House spokesperson described the US’s pressure on Canada as a “win” for the American public.
The US Customs and Border Protection agency halted imports eligible for duty-free entry under quota arrangements well before the midnight deadline, informing shippers that the quota paperwork had to be completed by 4:30 PM local time yesterday at US ports of entry, or the full tariffs would apply.
Doug Ford said he would fly to Washington for talks with Commerce Secretary Howard Lutnick
This move was positively received by US steel producers as it reinstates Trump’s original 2018 metals tariffs that had been weakened by various country exemptions and quotas, as well as thousands of product-specific exclusions.
“By closing loopholes in the tariff that have been exploited for years, President Trump will effectively revitalize a steel industry that is poised to support the rebuilding of America,” stated Philip Bell, President of the Steel Manufacturers Association.
“The revised tariff will ensure that American steelmakers can continue to create new high-paying jobs and make increased investments, confident that they will not be undercut by unfair trade practices,” Bell added.
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The countries most impacted by the tariffs are Canada—the largest foreign supplier of steel and aluminum to the US—Brazil, Mexico, and South Korea, all of which have enjoyed some level of exemptions or quotas.
The escalation of the US-Canada trade tensions coincided with Prime Minister Justin Trudeau’s preparations to transfer power this week to his successor, Mark Carney, who triumphed in the ruling Liberals’ leadership race last weekend.
On Monday, Carney mentioned he wouldn’t communicate with Trump until he was sworn in as prime minister. Trump reiterated on social media that he wished for Canada to become the “cherished Fifty-First State.”
Canadian Energy Minister Jonathan Wilkinson conveyed to Reuters that Canada could consider implementing non-tariff measures, such as restricting oil exports to the US or imposing export duties on minerals, should the US tariffs persist.
Read more: White House says Trump dropping plan to double metal tariffs on Canada
Canada exports approximately 4 million barrels of crude oil to the US daily through pipelines, primarily to Midwest refineries. Canadian tariffs on US ethanol also remain an option, he noted.
Most US-Canada trade continues to be duty-free under the USMCA trade agreement that Trump signed in 2020, but he continues to express concerns over Canada’s high tariff rates regarding dairy products.
Last week, Ottawa secured a one-month reprieve for USMCA-compliant exports from Trump’s general 25% tariffs, which were threatened over fentanyl trafficking.
However, early April brings Canada face-to-face with Trump’s reciprocal tariffs aimed at aligning US tariffs with those of other countries and counteracting non-tariff barriers.
Spools of steel in the yard at an ArcelorMittal Dofasco facility in Ontario, Canada
Canada, benefitting from abundant hydropower resources that render primary aluminum production more cost-effective than in the US, has established a strong foothold in the US aluminum market, despite US smelters that were once revitalized by Trump’s tariffs now being idled.
China remains the second-largest supplier of aluminum and aluminum-based products but already contends with high tariffs to counteract alleged dumping and subsidies, along with a new 20% tariff that Trump imposed in the past month concerning fentanyl trafficking.
Trump’s intense focus on tariffs since taking office in January has unsettled investor, consumer, and business confidence, prompting increasing concerns from economists about the potential for a recession.
A recent small business survey indicated a decrease in sentiment for the third consecutive month, completely erasing the confidence boost that followed Trump’s election victory on November 5, and a survey conducted by the New York Federal Reserve on Monday revealed that consumers are becoming more pessimistic regarding their finances, inflation, and the job market.
