The trade war is intensifying while the 25% of Trump's metal rates take effect

Joo da Silva and Tom Espine

Business reporters, BBC News

Reuters

The 25% right on steel and aluminum imports is a major success for some of the best business partners in the United States

The prices imposed by US President Donald Trump on steel and aluminum imports have taken effect in a decision that will probably increase tensions with some of the largest business partners in America.

He sparked an immediate response from the European Union which said it would impose prices against billions of euros in American products.

Trump hopes that the prices will stimulate American production of steel and aluminum, but criticisms say that this will increase prices for American consumers and the economic growth of bumps, while the American markets have flowed on Monday and Tuesday in response to fears of recession.

Trump on Tuesday made his return on the doubling of the prices on Canada in response to an additional cost, Ontario had placed on electricity.

The prices mean that American companies wishing to bring steel and aluminum to the country will have to pay a 25% tax on them.

On Wednesday, the EU announced reprisals in response on goods worth 26 billion (22 billion).

They will be partially introduced on April 1 and entirely in place on April 13.

The president of the European Union, Ursula von der Leyen, said that she “deeply regrets this measure” adding that the prices are “bad for business and worse for consumers”.

“They disrupt the supply chains. They bring uncertainty for the economy. The jobs are at stake, the prices, no one needs this, on both sides, neither in the EU nor in the United States.”

She said that the EU's response was “strong but proportioned” and that the EU remains “open to negotiations”.

However, the American Iron and Steel Institute (AISI), a group representing American steelmakers, welcomed the prices by saying that they would create jobs and stimulate domestic steel manufacturing.

Group president Kevin Dempsey said this decision closed a system of exemptions, exclusions and quotas that allowed foreign producers to avoid prices.

“AISI applauds the president's actions to restore the integrity of steel prices and implement a robust and invigorated program to combat unfair commercial practices,” added Mr. Dempsey.

The United States is an important importer of aluminum and steel, and Canada, Mexico and Brazil are among its largest metal suppliers.

'No exception'

Other countries also immediately responded to this decision.

Commerce secretary Jonathan Reynolds said he was disappointed and that “all the options were on the table” to respond in the national interest.

Australian Prime Minister Anthony Albanese said that Trump's decision to move forward with the new prices was “completely unjustified”.

Albanese, who had tried to guarantee an exemption at the prices, said that Australia would not impose reprisal tasks because such a decision would only increase prices for Australian consumers.

Meanwhile, Canadian Minister of Energy, Jonathan Wilkinson, told CNN that his country would retaliate, but added that Canada was not trying to intensify tensions.

Canada is one of the closest trade partners in America and the largest exporter of steel and aluminum with the United States.

In 2018, during his first mandate as president, Trump imposed 25% import rates on steel and 10% on aluminum, but the cuts were finally negotiated for many countries.

This time, the Trump administration indicated that there will be no exemption.

British steel

Gareth Stace, Managing Director of the Body UK Steel industry, said the US move was “extremely disappointing”.

Some steel company contracts have already been canceled or put on hold, he said, adding that customers in the United States will have to pay an additional 100 m per year in the tax.

He said that he shared Trump's concerns about cheap steel flooding the market, but that he had asked him to work with the United Kingdom rather against.

“President Trump surely realizes that we are his friend, not his enemy, and our precious customers in the United States are our partners, they are not our enemies,” he said.

The prices “will strike us hard” at a time when imports of steel in the United Kingdom increase and the industry is “struggling” with energy prices.

The Union Unit called on the government to “act decisively to protect the steel industry” because it is “a question of national security”.

Unite Secretary General Sharon Graham said there should be rules “to ensure that the public sector is still buying steel produced in the United Kingdom”.

Recession fears

Michael Dimarino directs Linda Tool, a Brooklyn company that manufactures parts for the aerospace industry. Everything it does implies a kind of steel, a large part of which comes from American factories.

“If I have higher prices, I transmit them to my customers. They have higher prices, they transmit it to the consumer,” said Dimarino, adding that he supports the call for increased manufacturing in the United States, but warning the president's movements could turn against him.

The American Automotive Policy Council, a group that represents car giants such as Ford, General Motors and Stellantis, also echoed these concerns.

The organization president Matt Blunt said that they “feared that the specific revocation of exemptions for Canada and Mexico adds significant costs” to suppliers of car manufacturers.

Some economists warn that prices could help the American steel and aluminum industries, but harm the wider economy.

“He protects [the steel and aluminium] The industries but harm users downstream of their products by making them more expensive, “said Bill Reinsch, a former head of the trade department, who is now at the Center for Strategic and International Studies.

The fear of the economic cost of Trump's commercial prices sparked a sale on the US and global stock markets that accelerated this week after the American president refused to exclude the prospect of an economic recession.

Meanwhile, the Oxford Economics research office said in a report that it had reduced its American growth forecasts for the year by 2.4% to 2% and provided even higher adjustments to its prospects for Canada and Mexico.

“Despite the demotion, we always expect the American economy to surpass other major advanced economies over the next two years,” added its report.

Additional Michelle Fleury report in New York

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