Washington doubled its tariffs on steel and
aluminum imports on Wednesday, the same day President Donald Trump's
administration expects trading partners to make "best offers" to avoid
other punishing import levies from taking effect in early July.
Maros Sefcovic, the trade negotiator for the European Union, said he
"had a productive and constructive discussion" with U.S. Trade
Representative Jamieson Greer in Paris on Wednesday morning.
"We're advancing in the right direction at pace - and staying in
close contact to maintain the momentum," Sefcovic said on X, without
giving any detail on the talks. He had been due to make the case for
cutting or eliminating threatened tariffs on European imports.
Late on Tuesday, Trump signed an executive proclamation that
activates from Wednesday a hike in the tariffs on imported steel and
aluminum to 50% from the 25% rate introduced in March.
"We started at 25 and then after studying the data more, realized
that it was a big help, but more help is needed. And so that is why the
50 is starting tomorrow," White House economic adviser Kevin Hassett
told a steel industry conference in Washington on Tuesday. The increase
came into effect at 12:01 a.m.
The increase applies to all trading partners except Britain, the only
country so far that has struck a preliminary trade agreement with the
U.S. during a 90-day pause on a wider array of Trump tariffs. The rate
for steel and aluminum imports from the U.K. - which does not rank among
the top exporters of either metal to the U.S. - will remain at 25%
until at least July 9.
The United States imports about a quarter of all its steel, and
Census Bureau data shows the increased levies will hit the closest U.S.
trading partners - Canada and Mexico - especially hard.
Canada will be even more exposed to the aluminum levies since it
exports to the U.S. roughly twice as much as the rest of the top 10
exporters' volumes combined. The U.S. gets about half of its aluminum
from foreign sources.
Prime Minister Mark Carney's office said Canada was "engaged in
intensive and live negotiations to have these and other tariffs
removed."
Mexico's Economy Minister Marcelo Ebrard reiterated that the tariffs
were unsustainable and unfair, especially given that Mexico imports more
steel from the U.S. than it exports there.
The increase in the levies jolted the market for both metals this
week, especially for aluminum, which has seen price premiums more than
double this year. With little capacity to increase domestic production,
U.S. import volumes are likely to be unaffected unless the price
increases undercut demand.
Wednesday is also when the White House would like trading partners to
propose deals that might help them avoid Trump's hefty "reciprocal"
tariffs on imports across the board from taking effect in five weeks.
U.S. officials have been in talks with a number of countries since
Trump announced a pause on those tariffs on April 9, but so far only the
U.K. deal has come to fruition. Even that pact is more of a preliminary
framework for more talks.
Reuters reported on Monday that Washington was asking countries to
list their best proposals in a number of key areas, including tariff and
quota offers for U.S. products and plans to remedy any non-tariff
barriers.
In turn, the letter promises answers "within days" with an indication
of a "landing zone," including what tariff rates countries can expect
after the 90-day pause ends on July 8.
At issue for most trading partners is whether they retain the current
baseline rate of 10% on most exports to the U.S. after that date, or
something possibly much higher.
Separately, alarm over China's hold on the critical minerals market
is growing as global automakers joined U.S. counterparts to complain
that its restrictions on exports of rare earth alloys, mixtures and
magnets could cause production delays.
China's decision in April to suspend exports of a wide range of rare
earths and related magnets has upended the supply chains central to
automakers, aerospace manufacturers, semiconductor companies and
military contractors globally.
Uncertainty around U.S. trade policy is creating havoc for businesses
around the world. On Wednesday, French spirits group Remy Cointreau
abandoned its 2030 sales growth ambitions, saying tariffs, slow U.S.
sales and high uncertainty could derail its plans for this financial
year and beyond.
Austrian speciality steelmaker Voestalpine also warned that tariffs
were likely to dent its earnings, while German engineering lobby group
VDMA blamed uncertainty caused by Trump's tariffs for a 6% drop in
orders its members reported in May.
Meadow, a Swedish business which reuses aluminum cans to make
packaging for consumer goods, said the company was looking for ways to
protect against future shocks.
"One way to do that is to move supply chains closer to home so as to
become less reliant on strategically compromised countries for supply,"
said Meadow's head of sustainability Ross Murdoch.
