Canada, EU Condemn Trump Steel And Aluminum Tariffs, Vow To Retaliate

The European Union and Canada vowed to respond after President Trump decided to impose tariffs on all steel and aluminum imports, escalating fears of a trade war. Trump signed proclamations late on Monday raising the U.S. tariff rate on aluminum to 25% from his previous 10% rate and eliminating country exceptions and quota deals as well as hundreds of thousands of product-specific tariff exclusions for both metals.

The measures, which will take effect on March 12, will apply to millions of tons of steel and aluminum imports from Canada, Brazil, Mexico, South Korea and other countries - but mostly Canada - that had been entering the U.S. duty free under the carve-outs. 

As noted last night, Canada is by far the most impacted from hike on steel and aluminum tariffs, as the country is by far the largest exporter of the two commodities to the US.

Steel imports accounted for about 23% of American steel consumption in 2023, according to American Iron and Steel Institute data, with Canada, Brazil and Mexico the largest suppliers. Canada, whose abundant hydropower resources aid its metal production, accounted for nearly 80% of U.S. primary aluminum imports in 2024.

Speaking during a visit to Paris on Tuesday, Canada's Prime Minister Justin Trudeau called the tariffs "unacceptable" adding that, if necessary, Canada's response would be firm and clear: Canadians will stand up strongly and firmly if we need to," he said.

Meanwhile Canada's version of Victoria Nuland and Samantha Power combined, Chrystia Freeland, who is also vying for Trudeau's job, warned Trump in no uncertain terms that this aggression toward Canada will not stand.

European Commission President Ursula von der Leyen also condemned the decision, saying the 27-nation bloc would take "firm and proportionate countermeasures".

“I deeply regret the US decision to impose tariffs on European steel and aluminum exports,” European Commission President Ursula von der Leyen said in a Tuesday statement. “Unjustified tariffs on the EU will not go unanswered — they will trigger firm and proportionate countermeasures.”

Von der Leyen added that tariffs were taxes that were bad for business and worse for consumers. EU steel exports to the U.S. have averaged about 3 billion euros ($3.1 billion) a year over the past decade.

The EU has prepared multiple lists of American goods to hit with retaliatory tariffs if Trump moves forward with levies, modeling various possibilities depending on what the initial US salvo looks like, Bloomberg reported earlier. The bloc could move quickly by re-applying duties it first imposed on the US during Trump’s first term.

One option for the EU would be to reactivate the tariffs it imposed in 2018 that were suspended under a truce agreed between Von der Leyen and then-U.S. president Joe Biden. The EU tariffs on U.S. products such as bourbon, motorcycles and orange juice are currently suspended until the end of March.

In figures likely to further irk Trump, Germany's trade surplus with the U.S. reached a record level last year of 70 billion euros ($72.3 billion), according to data from the German statistics office.

The American Chamber of Commerce to the EU (AmCham EU), representing U.S. companies active in Europe, also criticised the move as harmful to jobs, prosperity and security on both sides of the Atlantic.

"The damage will extend beyond just the steel and aluminium sectors, impacting all businesses that rely on these materials throughout the supply chain," it added in a statement.

The tariffs follow through on Trump’s complaint that the EU treats the US “very unfairly,” and he often cites the bloc’s trade surplus with the US as a reason for punitive measures.

The move will simplify tariffs on the metals "so that everyone can understand exactly what it means," Trump told reporters. "It's 25% without exceptions or exemptions. That's all countries, no matter where it comes from, all countries."

Trump also said he would follow with announcements about reciprocal tariffs on all countries that impose duties on U.S. goods over the next two days, and said he was also looking at tariffs on cars, semiconductors and pharmaceuticals.

Trump also will impose a new North American standard requiring steel imports to be "melted and poured" and aluminum to be "smelted and cast" within the region to curb U.S. imports of minimally processed Chinese and Russian metals that circumvent other tariffs. While China exports only tiny volumes of steel to the U.S., it is responsible for much of the world's excess steel capacity, according to the U.S. It says subsidised production in China forces other countries to export more and leads to transshipment of Chinese steel through other countries into the U.S. to avoid tariffs and other trade restrictions.

In the end, however, Trump is once again right to seek reciprocal trade terms, because as shown in the chart below, the US has the lowest trade-weighted tariff rate across virtually the entire developed world.

Shares in major listed steelmakers in China slid on Tuesday while shares of U.S. steel and aluminum manufacturers in the U.S. were set for gains.