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The Trump administration will put tariffs on steel and aluminum imports from Canada, Mexico and the European Union, the latest action in a string of protectionist policies to crack down on alleged trade abuses.
The tariffs of 25 percent on steel imports and 10 percent on aluminum imports will take effect at midnight Thursday, Commerce Secretary Wilbur Ross told reporters. The U.S. gave those allies a reprieve from the duties, but the exemptions were set to expire Friday. The Trump administration will place quotas or volume limits on other countries such as South Korea, Argentina, Australia and Brazil instead of tariffs, he said.
Condemnation from U.S. allies poured in immediately Thursday. European Commission President Jean-Claude Juncker called the tariffs "unjustified" and said the EU will introduce countermeasures in the coming hours. A spokesperson for the British government also said the U.K. is "deeply disappointed" in the move and added U.S. allies "should be permanently and fully exempted" from the tariffs. Mexico also said it would impose tariffs in response to the U.S. actions.
The Trump administration move is only its latest in a series of actions targeting foreign countries' trade practices that escalates the chances of a trade war with major world economies. Trump has repeatedly promised to crack down on trade habits that he says harm American companies and sap U.S. jobs.
In a proclamation announcing the measures, Trump wrote that he agreed with Ross' "finding that steel mill articles are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States." American steel and aluminum producers have cheered the Trump administration's metals tariffs, and shares of companies such as U.S. Steel and AK Steel surged Thursday.
Meanwhile, the prospect of more protectionism led the Dow Jones industrial average and S&P 500 to hit their lows for Thursday trading after the news. The U.S. dollar also approached a session high against the Canadian dollar and Mexican peso.
The actions come as the U.S. tries to strike a revised North American Free Trade Agreement deal with Canada and Mexico, and settle other trade concerns with the EU. It will increase tensions with allies even as the U.S. seeks help to address alleged trade abuses by China.
The Commerce secretary said the exemptions would end in part because NAFTA talks are "taking longer than we had hoped." Negotiations with Europe have "made some progress" but not gone far enough to warrant more relief from the tariffs, he added.
"We look forward to continued negotiations both with Canada and Mexico on the one hand, and with the European Commission on the other hand, because there are other issues that we also need to get resolved," Ross said.
In a subsequent interview with CNBC, he contended that retaliatory tariffs from U.S. allies would not have a significant effect on the U.S. economy.
The metals tariff decision comes as the Trump administration tries to negotiate a pact with China to avoid a potentially devastating trade war. On Tuesday, the White House said it would release a list by mid-June of about $50 billion worth of Chinese goods on which the U.S. will impose a 25 percent tariff.
Trump's move to crack down on metals imports has received praise from pockets of both major political parties who contend foreign products have hurt the American steel and aluminum industries. Some free trade lawmakers in Trump's Republican Party have opposed the actions.
Sen. Ben Sasse, R-Neb., called Trump's decision Thursday "dumb" and said "you don't treat allies the same way you treat opponents." Sen. Jeff Flake, R-Ariz., also tweeted "this is no way to treat our allies, Mr. President."
The CEO of the National Association of Manufacturers CEO, Jay Timmons, told CNBC on Thursday ahead of the announcement that the tariffs "could harm manufacturers in the United States." Meanwhile, the powerful political network funded by conservative billionaire donors Charles and David Koch denounced the decision to implement the tariffs, urging the White House to "abandon" similar policies.
In announcing the metals tariffs in March, the president argued trade trends "destroyed" U.S. steel and aluminum companies.
"People have no idea how badly our country has been treated by other countries. By people representing us who didn't have a clue," Trump said.
A trade team led by Ross met with EU economic officials on Wednesday, but those efforts apparently did not yield results.
In a statement, Juncker said he is "concerned" by the U.S. decision and called the tariffs "unjustified and at odds with World Trade Organization rules. " He said "overcapacity" in the steel sector is the issue, but denied the EU is the source of it.
"By targeting those who are not responsible for overcapacities, the US is playing into the hands of those who are responsible for the problem. The US now leaves us with no choice but to proceed with a WTO dispute settlement case and with the imposition of additional duties on a number of imports from the US," the statement said.
The EU has already prepared a list of U.S. products to target. Those American exports include bourbon, rice and motorcycles.
Mexico also said Thursday it will target a variety of U.S. products with equivalent measures. The country could target products such as fruit, cheeses and lamps.