The United States yesterday said it will impose tariffs on aluminum and steel imports from Canada, Mexico and the European Union, reigniting investor fears of a global trade war as Washington’s allies took steps to retaliate against U.S. goods.
The move, announced by U.S. Commerce Secretary Wilbur Ross in a telephone briefing on Thursday, ended months of uncertainty about potential tariff exemptions and suggested a hardening of the Trump administration’s approach to trade negotiations.
It also sent a chill through financial markets, with the Dow Jones Industrial Average down about 1 percent and the S&P 500 off around 0.6 percent. Shares of industrial heavyweights Boeing fell 1.5 percent while those of Caterpillar shed 2 percent.
A 25 percent tariff on steel imports and 10 percent tariff on aluminum imports will be imposed on the EU, Canada and Mexico starting at midnight (0400 GMT on Friday), Ross told reporters.
“We look forward to continued negotiations, both with Canada and Mexico on the one hand, and with the European Commission on the other hand, because there are other issues that we also need to get resolved,” he said.
Canada and Mexico, embroiled in talks with the United States to modernize the North American Free Trade Agreement (NAFTA), responded swiftly.
Canada, the largest supplier of steel to the United States, will impose retaliatory tariffs covering C$16.6 billion in imports from the United States, including whiskey, orange juice, steel, aluminum and other products, Canadian Foreign Minister Chrystia Freeland said.
Ottawa will also challenge the tariffs under NAFTA and World Trade Organization rules, she said.
Mexico announced what it described as “equivalent” measures on a wide range of U.S. farm and industrial products.