The European Union, Canada and Mexico said Thursday that they will respond to new United States tariffs on steel and aluminum with punitive measures targeting American products worth billions of dollars.
The move, announced by US Commerce Secretary Wilbur Ross in a telephone briefing, ended months of uncertainty about potential tariff exemptions and suggested a hardening of the Trump administration's approach to trade negotiations. President Trump doesn't. We must understand that.
The White House announced negotiations with Mexico, Canada and the European Union did not go so well and from Friday, the USA would slap the three allies with steel and aluminium tariffs.
In the case of Canada and Mexico, the USA had hoped to address its national security concerns in the context of ongoing efforts to renegotiate NAFTA, but those talks have taken longer than expected and there is now no precise end date in sight, Ross said.
Procurement Minister Carla Qualtrough predicts "significant consequences" to Canada's defence industry as the US moves to impose tariffs on Canadian steel.
According to CTV News, Prime Minister Justin Trudeau said during a Thursday press conference the Trump administration's decision is "a turning point in the Canada-U.S. relationship" and "totally unacceptable". The Trump administration is transparently risking the country's alliances to extort concessions in separate negotiations over Nafta and trade with Europe.
Ottawa will also challenge the USA measures under NAFTA and at the WTO, said Trudeau.
Mexico announced what it described as "equivalent" measures on a wide range of USA farm and industrial products.
Mexico has also responded, promising to slap tariffs on US products including pork bellies, grapes, apples, and flat steel.
The S&P 500's packaged foods and meats industry sub-index.SPLRCFOOD fell 2 percent, with shares of meat producer Tyson Foods Inc (TSN.N) falling 3.9 percent. At its low, the peso was at its weakest against the dollar in almost 15 months.
The EU had already publicly announced that in the event tariffs did go ahead, it would impose levies on Levi-made jeans, Harley-Davidson motorbikes and bourbon whiskey.
On Thursday, EU Commission president Jean-Claude Juncker said the 28 EU member countries would challenge the tariffs and "impose their own balancing import duties on United States goods like Florida orange juice, and bourbon whiskey". European Union exports subject to USA duties are worth 6.4 billion euros ($7.5 billion).
Trump and his allies argue that America's trading partners - especially China - are taking advantage of the US and that the tariffs will cause American companies to make more steel and aluminum here, creating jobs and boosting the economy.
President Donald Trump had originally imposed the tariffs in March, saying a reliance on imported metals threatened national security.
South Korea, Argentina, Australia, and Brazil have all signed separate trade deals with the United States, and will be exempt from all or part of the tariffs.
He signed-off the new tariffs surrounded by United States steel workers who are supportive of his decision.
The tariffs are aimed at allowing the U.S. steel and aluminum industries to increase their capacity utilization rates above 80 percent for the first time in years. The US accounts for 90 percent of Canada's steel exports, however.
"Without a strong economy, you can't have a strong national security, ' he said".