US President Donald Trump yesterday officially increased tariffs on all steel and aluminum imports to 25 percent, while the EU announced its countermeasures.
European Commission President Ursula von der Leyen said that as the US was “applying tariffs worth US$28 billion, we are responding with countermeasures worth 26 billion euros (US$28.3 billion).”
The EU’s measures, which cover not just steel and aluminum products, but also textiles, home appliances and agricultural goods, are to take effect on April 1.
Photo: EPA-EFE
Trump promised that the taxes would help create US factory jobs at a time when his seesawing tariff threats are jolting stock markets and raising fears of an economic slowdown.
He removed all exemptions from his 2018 tariffs on the metals, in addition to increasing the tariffs on aluminum from 10 percent. His moves, based on a directive last month, are part of a broader effort to disrupt and transform global commerce. The US president has separate tariffs on Canada, Mexico and China, with plans to also tax imports from the EU, Brazil and South Korea by charging “reciprocal” rates starting on April 2.
Trump told CEOs in the Business Roundtable on Tuesday that the tariffs were causing companies to invest in US factories.
The 8 percent drop in the S&P 500 stock index over the past month on fears of deteriorating growth appears unlikely to dissuade him, as Trump argued that higher tariff rates would be more effective at bringing back factories.
“The higher it goes, the more likely it is they’re going to build,” Trump told the group. “The biggest win is if they move into our country and produce jobs. That’s a bigger win than the tariffs themselves, but the tariffs are going to be throwing off a lot of money to this country.”
Trump on Tuesday threatened to put tariffs of 50 percent on steel and aluminum from Canada, but he chose to stay with the 25 percent rate after Ontario suspended plans to put a surcharge on electricity sold to Michigan, Minnesota and New York.
In many ways, the US president is addressing what he perceives as unfinished business from his first term. Trump meaningfully increased tariffs, but the revenues collected by the federal government were too small to significantly increase overall inflationary pressures.
Trump’s 2018 tariffs on steel and aluminum were eroded by exemptions.
After Canada and Mexico agreed to his demand for a revamped North American trade deal in 2020, they avoided the import taxes on the metals. Other US trading partners had import quotas supplant the tariffs. The first Trump administration also allowed US companies to request exemptions from the tariffs if, for instance, they could not find the steel they needed from domestic producers.
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