Trump’s metals tariffs spur billion-dollar backlash from longtime allies

While the president announced the duties in March, claiming the penalties were necessary to ensure the U.S. maintains a viable steel industry, he initially granted exemptions to Europe, Mexico and Canada through June 1.

The blue-chip Dow Jones industrial average slid 1 percent after Ross’s announcement, and remains 8.2 percent below a January peak as investors grapple with concern that Trump’s protectionist policies will lead to an economically damaging trade war.

Canada announced dollar-for-dollar tariffs on $16.6 billion of steel and aluminum imports from the U.S., starting July 1, later the same day.

Mexico, meanwhile, said it would penalize U.S. imports including pork bellies, apples, grapes, cheeses and flat steel. The European Union, which has already threatened retaliatory tariffs of 10 percent to 50 percent on more than $7 billion in U.S. products from cosmetics to liquor and crops, expressed immediate outrage.

“We will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk,” said European Commission President Jean-Claude Juncker. “The EU will react firmly and commensurately to defend our interests.”

Canada will cooperate with other U.S. trading partners, including Europe, contesting the American measures at the WTO, Foreign Affairs Minister Chrystia Freeland said in an afternoon news conference.

The tariffs are “an affront to the longstanding security partnerships between Canada and the U.S. and an affront to Canadians who have fought and died alongside their American brothers in arms,” said Prime Minister Justin Trudeau. “This is not about the American people. We have to believe that at some point, common sense will prevail. But we see no sign of that today in this action by the U.S. administration.”

The international reactions to Trump’s move only add to U.S. manufacturers’ worries about the impact of his trade threats against China as well as his proposal to add 25 percent tariffs on automobiles and parts.

“It is important to see today’s action in the larger trade environment created by the Trump administration,” said Ann Wilson, senior vice president of government affairs for the Motor Equipment and Manufacturers Association. “Our members could face having to pay double tariffs on some materials necessary to manufacture parts in the U.S.”

Industries such as the automobile sector require long-term investments in facilities and employees, which “depend on regulatory and market stability,” she said. “These actions have thrown all of that up in the air. There is little doubt that the uncertainty and added costs the administration is creating will put U.S. investments and jobs at risk.”

Dropping the exemptions “only worsens a self-inflicted wound on our economy and unnecessarily exposes U.S. exporters to foreign retaliation,” the Business Roundtable, which represents the 200 largest U.S. companies, said in a statement. “These tariffs and increased costs have already caused harm to U.S. businesses and workers.”

Several lawmakers, including some in Trump’s own party, have also criticized the president’s trade actions this year, with Sen. Ben Sasse of Nebraska cautioning that a trade war risks making America “1930 again,” a reference to the Great Depression.

Sen. Orrin Hatch, a Utah Republican who chairs the Senate Finance Committee, which has jurisdiction over trade, promised to continue pushing the administration to change course.

“Tariffs on steel and aluminum imports are a tax hike on Americans and will have damaging consequences for consumers, manufacturers and workers,” he said.

House Ways and Means Committee Chairman Kevin Brady, a Texas Republican, agreed with Hatch that the tariffs are “hitting the wrong target.”

“When it comes to unfairly traded steel and aluminum, Mexico, Canada, and Europe are not the problem — China is,” he said. “This action puts American workers and families at risk, whose jobs depend on fairly traded products from these important trading partners.”

The administration should reverse course, Brady said, reinstating exemptions for the three regions and addressing damage caused to American exporters. “The administration will need to come to Capitol Hill to provide answers about the indiscriminate harm these tariffs are causing our local businesses,” he said.

So far, the levies have yielded varied results with other other international trading partners.

Brazil, Argentina, and Australia have agreed to limit steel shipments to the U.S. in exchange for being spared the tariffs, the Commerce Department pointed out. Tariffs will remain on imports from Japan.

Ross told reporters that talks with Canada and Mexico over revising the North American Free Trade Agreement were “taking longer than we had hoped.” Talks with Europe had “made some progress” but not enough for additional exemptions, he said in a conference call from Paris.

“We continue to be quite willing and indeed eager to have further discussions,” Ross said. He said he planned to travel to China on Friday for trade talks between the world’s two biggest economies.

Canada’s Trudeau told reporters he had proposed visiting the U.S. to put the finishing touches on a trade deal with Trump but scrapped the plans after Vice President Mike Pence told him Canada would have to accept a pre-condition for the visit: Agreeing to a five-year sunset clause on the North American Free Trade Agreement.

That would be a dealbreaker for any Canadian prime minister, Trudeau said, explaining the events that led to Canada’s retaliation.

“This is the strongest trade action Canada has taken in the post-war era,” Freeland said. “This is about the U.S. and the posture the U.S. has chosen to assume toward the rest of the world, particularly toward its closest friends and allies.”

— With assistance from the Associated Press.