Massive US tariffs come into force on Friday as condemnation of the Trump administration’s move intensifies.
Criticism of the import tax on steel and aluminium from the EU, Canada and Mexico was joined by top congressional Republicans.
Leaders from affected nations reacted furiously, setting out tit-for-tat tariffs on the US, ranging from steel to sleeping bags and ballpoint pens.
France’s president told Mr Trump by phone that the US move was “illegal”.
Emmanuel Macron told him the EU would respond in a “firm and proportionate manner”, the Elysee Palace says.
The French president normally enjoys a good relationship with his US counterpart.
Mr Trump has justified the tariffs by arguing that US steel and aluminium producers are vital to national security and threatened by a global supply glut.
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Trudeau: Canada not US national security threat
That rationale was rejected by allies. Canadian Prime Minister Justin Trudeau described that claim as an affront. “That Canada could be considered a national security threat to the United States is inconceivable,” he said.
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What are others saying?
UK International Trade Secretary Liam Fox said the 25% levy on steel was “patently absurd”. He branded the Trump administration’s move as “just protectionism”, adding: “It would be a great pity if we ended up in a tit-for-tat trade dispute with our closest allies.”
Mexican Foreign Minister Luis Videgaray said his country would also impose duties: “Mexico’s position on trade, or on immigration, or on security, or on whatever area of co-operation with the United States, will not vary, not because of offensive rhetoric nor unjustified unilateral measures like this type. We will continue to defend the interests of Mexico, just as we have done until now.”
Opposition to the tariffs was joined by congressional Republicans. “I disagree with this decision,” House Speaker Paul Ryan, the most influential Republican in Congress, said in a statement.
“Today’s action targets America’s allies when we should be working with them to address the unfair trading practices of countries like China,” he said.
And House Ways and Means Committee chairman Kevin Brady said: “These tariffs are hitting the wrong target.” Europe, Mexico and Canada “are not the problem – China is”, he added.
What do the US tariffs mean?
Mr Trump first announced plans for the tariffs in March, but granted some exemptions while countries negotiated.
US Commerce Secretary Wilbur Ross on Thursday said talks with the EU, Canada and Mexico had not made enough progress to warrant a further reprieve.
Tariffs of 25% on steel and 10% on aluminium go into effect on Friday.
They apply to items such as plated steel, slabs, coil, rolls of aluminium, and tubes – raw materials which are used extensively across US manufacturing, construction, and the oil industry.
Mr Ross said the president had the authority to lift the tariffs or alter them at any time, leaving room for “flexibility”.
“We continue to be quite willing and indeed eager to have discussions with all those parties,” Mr Ross said.
What action are Canada, Mexico and Europe taking?
Canada said it would levy tariffs of up to 25% on about $13bn worth of US products starting 1 July. Those include certain types of American steel, as well as consumer goods such as yoghurt, whiskey and roasted coffee.
Mexico’s economy ministry said it was planning new duties for steel, pork legs and shoulders, apples, grapes, blueberries and cheese.
The EU’s 10-page list of retaliatory tariffs range from cast iron to kidney beans and snuff.
It has announced it will also take action against the US at the World Trade Organisation.
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What economic effect will all this have?
Canada, Mexico and the EU together exported $23bn (£17bn) worth of steel and aluminium to the US in 2017 – nearly half of the $48bn of total steel and aluminium imports last year.
European firms have said they fear lower US demand for foreign steel will divert shipments to Europe.
But IHS Markit associate John Anton said he expected the effects to be distributed across a wide range of markets, limiting the effect on prices outside of the US.
That leaves America to bear the brunt of the economic impact, which economists say will appear in the form of higher prices and job losses – as many as 470,000 by one estimate.
Steel prices in the US have already spiked due to the uncertainty.
Information firm IHS Markit predicts US steel prices will rise roughly 10% more in coming months largely as a result of the wider application of the tariffs.
Mr Ross has dismissed the concerns about higher costs, arguing that the effects will be minimal.
But analysts said certain industries, such as manufacturing, are likely to face severe impact.
“Hopefully devastated is too strong a word, but I’m not sure it is,” Mr Anton said.
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Mr Levy added that while the overall economic impact might remain relatively modest, the decision to expand the tariffs to allies fuelled concerns about the administration’s other threats.
“This in and of itself is not that quantitatively significant,” he said. “It’s just a horrible precedent.”
Source: BBC News