The U.S. is set to impose a 25 percent tariff on steel and aluminum imports, affecting all countries, including Canada and Mexico. President Trump plans to introduce reciprocal tariffs and will announce these measures imminently. The EU is preparing countermeasures amid concerns about a trade war. Meanwhile, Germany faces economic risks due to potential tariffs impacting its export-driven economy, as the U.S. is a key market for German goods.
The United States is on the brink of imposing new tariffs that will significantly impact the steel and aluminum sectors. A 25 percent tariff is expected to be implemented on imports from all countries within the week, prompting potential retaliatory measures from the EU.
President Donald Trump is poised to announce a 25 percent tariff on steel and aluminum imports entering the United States. This announcement is anticipated at the start of the week, as Trump shared with reporters during his flight on Air Force One heading to New Orleans for the Super Bowl, the ultimate championship game in American football. These tariffs will apply universally, with no exceptions made for neighboring countries like Canada and Mexico.
In addition to these tariffs, Trump plans to introduce ‘reciprocal tariffs.’ This mechanism would allow the U.S. to levy import tariffs on goods from countries that impose tariffs on American products. “It’s straightforward: If they impose a fee on us, we impose a fee on them,” Trump indicated.
When queried about the implementation timeline for these tariffs, Trump replied that they would take effect “almost immediately.” He confirmed that the tariffs on steel and aluminum would be disclosed on Monday, followed by additional tariffs likely announced on Tuesday or Wednesday.
Questions remain regarding how far Trump is willing to extend his protective tariffs and the implications of the fentanyl crisis in the U.S.
Impact on Canada, Brazil, and Mexico
According to data from the American Iron and Steel Institute and government sources, the primary steel suppliers to the U.S. include Canada, Brazil, and Mexico, with South Korea and Vietnam also significant players. Canada stands out as the largest supplier of primary aluminum, contributing to 79 percent of total imports in the first eleven months of 2024. Mexico plays a crucial role as a supplier of aluminum scrap and alloys. Canadian officials have stated that Ottawa will refrain from responding to Trump’s tariff announcement until they receive more comprehensive details or a formal written statement from the President.
Trump also noted that the U.S. government would permit the Japanese firm Nippon Steel to invest in U.S. Steel, although they would not be allowed to acquire a controlling interest. “The tariffs will rejuvenate the company, and I believe it boasts strong management,” Trump stated regarding U.S. Steel. Nippon Steel has yet to comment on these developments.
A Trade War Averted – For Now
Just recently, a North American trade war was momentarily avoided, sparing the global economy from uncertainty. Trump made concessions primarily focused on border security just hours before the threatened 25 percent tariffs were set to be implemented on goods from Canada and Mexico. Consequently, he postponed these trade restrictions for at least 30 days.
In contrast, Trump remains firm against China, having enacted a 10 percent tariff on all Chinese goods last Tuesday. Upon his return to the White House, he reiterated his tariff threats against the European Union, aiming to bolster U.S. manufacturing and decrease the trade deficit with Europe.
The EU is preparing for potential U.S. tariffs and has issued counter-threats while also presenting offers.
Decisive Actions from the EU
During a recent summit in Brussels, the EU demonstrated its resolve regarding Trump’s tariffs. Chancellor Olaf Scholz and French President Emmanuel Macron announced plans for European countermeasures should the U.S. impose additional tariffs on EU products. EU diplomats noted that the European Commission had proactively prepared potential responses. Scholz mentioned in a TV debate on ARD that the EU could enact appropriate measures within hours if Trump proceeds with the tariffs.
In Trump’s previous term, the EU retaliated against new tariffs on European steel and aluminum by imposing special tariffs on bourbon whiskey, Harley-Davidson motorcycles, and denim jeans. The strength of the EU’s response this time will depend heavily on the specifics of Trump’s tariff decisions.
The steel conflict involving Great Britain, the EU, and Japan remains a contentious issue stemming from the Trump era.
Germany Faces Export Risks
New tariffs on imports from Europe would represent a significant challenge for Germany’s export-oriented economy, which has already faced contraction for two consecutive years. The U.S. is a vital market for German exporters, and economists are increasingly concerned about the potential for a trade war between the U.S. and the EU.