Donald Trump said he will impose a 25 per cent duty on all steel and aluminium imports entering the US as the President’s attempt to reorder the global trading system continued.
Speaking from Air Force One last night, Trump said the tariffs would cover “everybody“, which will be a major hit to Canada and Mexico, two of the US’s largest steel trading partners.
He did not specify when the duties would come into effect. Trump also said he would announce reciprocal tariffs later this week on countries who levy tariffs on US imports.
The measures will be put in place “almost immediately” after being announced, he said. “If they charge us, we charge them,” he added.
Trump’s steel threats came shortly after China put in place retaliatory tariffs on a range of US goods, including energy commodities, agricultural machinery and high-performance cars.
Victor Gao, a Chinese diplomat and economist, told the BBC that the tariffs were “truly tit-for-tat because China wants to have free trade for all of these things”.
Trump put in place a 10 per cent blanket duty on all Chinese imports last week.
Kathleen Brooks, head of research at XTB, said the measures “essentially start a new trade war between the two largest global economies”.
Asked about the steel tariffs, Home Office minister Angela Eagle said the government will have to “wait and see” exactly what Trump means.
“We have a very balanced trading relationship with the US – I think £300bn worth of trade between our countries – and I think it’s in the best interests of both of us, as longstanding allies and neighbours, that we carry on with that balanced trade,” she said.
Tom Clougherty, executive director at the Institute of Economic Affairs, said the UK should not impose retaliatory tariffs on the US.
“Tariffs are a tax on domestic consumers,” he said. “That logic doesn’t change just because other countries impose tariffs on the import of your goods. Retaliatory tariffs simply add to the pain.”
Despite the tariff news, markets were largely unfazed, with European markets rising in early trade while Asian markets closed higher on Monday too. US futures were also called to open higher.
“Risky assets are getting a bit desensitized to Trump’s tariff announcement,” Mohit Kumar, an analyst at Jefferies said.
Derren Nathan, head of equity research, Hargreaves Lansdown said “markets are largely taking unfolding events in their stride”.