Global trade war looms as Trump’s metal tariffs kick in

WASHINGTON — President Donald Trump’s increased tariffs on all US steel and aluminum imports took effect on Wednesday, stepping up a campaign to reorder global trade in favor of the US and drawing swift retaliation from Europe.

Mr. Trump’s action to bulk up protections for American steel and aluminum producers restores effective global tariffs of 25% on all imports of the metals and extends the duties to hundreds of downstream products made from the metals, from nuts and bolts to bulldozer blades and soda cans.

Mr. Trump’s hyper-focus on tariffs since taking office in January has rattled investor, consumer and business confidence in ways that economists worry could cause a US recession and further lag on the global economy.

The European Commission, the executive arm of the European Union charged with coordinating trade matters, responded swiftly, saying it would impose counter tariffs on 26 billion euros ($28 billion) worth of US goods from next month.

“W�� are ready to engage in meaningful dialogue,” Commission President Ursula von der Leyen told reporters, adding she had tasked Trade Commissioner Maros Sefcovic to resume his talks to “explore better solutions with the US.”

“W�� firmly believe that in a world fraught with geoeconomic and political uncertainties, it is not in our common interest to burden our economies with such tariffs.”

China’s foreign ministry said Beijing would take all necessary measures to safeguard its rights and interests, while Japan’s Chief Cabinet Secretary Yoshimasa Hayashi said the move could have a major impact on US-Japan economic ties.

Close US allies Canada, Britain and Australia criticized the blanket tariffs, with Canada mulling reciprocal actions and Britain’s Trade Minister Jonathan Reynolds saying “all options were on the table” to respond in the national interest.

Australian Prime Minister Anthony Albanese said the move was “against the spirit of our two nations’ enduring friendship” but ruled out tit-for-tat duties.

“Tariffs and escalating trade tensions are a form of economic self-harm, and a recipe for slower growth and higher inflation,” he told reporters.

The countries most affected by the tariffs are Canada, the biggest foreign supplier of steel and aluminum to the US, Brazil, Mexico, and South Korea, which all have enjoyed some level of exemptions or quotas.

Mr. Trump initially threatened Canada with doubling the duty to 50% on its steel and aluminum exports to the US but backed off after Ontario province suspended a move to impose a 25% surcharge on electricity exports to the states of Minnesota, Michigan, and New York.

That incident whip-sawed US financial markets already jittery over Mr. Trump’s broad tariff offensive. Asian markets were broadly steady on Wednesday, although Australia’s benchmark closed 9.6% below February’s record high.

The US Customs and Border Protection agency cut off imports qualifying for duty-free entry under quota arrangements well before the midnight deadline, saying in a bulletin to shippers that quota paperwork needed to be processed by 4:30 p.m. local time on Tuesday at US ports of entry or the full tariffs would be charged.

The move was welcomed by US steel producers as restoring Mr. Trump’s original 2018 metals tariffs that had been weakened by numerous country exclusions and quotas and thousands of product-specific exclusions.

“By closing loopholes in the tariff that have been exploited for years, President Trump will again supercharge a steel industry that stands ready to rebuild America,” Steel Manufacturers Association President Philip Bell said.

“The revised tariff will ensure that steelmakers in America can continue to create new high-paying jobs and make greater investments knowing that they will not be undercut by unfair trade practices,” Mr. Bell added.

The escalation of the US-Canada trade war occurred as Prime Minister Justin Trudeau prepared to hand over power this week to his successor Mark Carney, who won the leadership race of the ruling Liberals last weekend.

On Monday, Mr. Carney said he could not speak with Mr. Trump until he was sworn in as prime minister. Mr. Trump repeated on social media he wanted Canada as “our cherished Fifty-First State.”

Canadian Energy Minister Jonathan Wilkinson told Reuters that Canada could impose non-tariff measures such as restricting oil exports to the US or levying export duties on minerals, if US tariffs persist.

Canada, with ample hydropower resources that has made primary aluminum production more cost effective than in the US, has built a commanding position in the US aluminum market, as US smelters once revived by Mr. Trump’s tariffs have been idled.

China remains the number two supplier of aluminum and goods made from aluminum but already faces high tariffs to counteract alleged dumping and subsidies, as well as a new 20% tariff that Mr. Trump has imposed over the past month over fentanyl trafficking.

Domestically, nerves are growing over Mr. Trump’s economic agenda. A small business survey on Tuesday showed sentiment weakening for a third straight month, fully eroding a confidence boost following Mr. Trump’s Nov. 5 election victory. A survey of households by the New York Federal Reserve on Monday showed consumers growing more pessimistic about their prospects. — Reuters