Steel coils are seen at ArcelorMittal Dofasco factory in Hamilton, Ont., on March 12.Cole Burston/The Globe and Mail
President Donald Trump’s trade war has taken on a global dimension, with key U.S. allies and trading partners imposing new levies on American goods in response to tariffs issued by the White House early Wednesday on foreign aluminum and steel.
The swift response from Canada and the European Union came three weeks before the day Mr. Trump has pledged a far more sweeping set of tariffs – an imminent date that has also constrained the response from other countries, including Australia and Britain, as they wait to see what might come next.
Hours after the new U.S. tariffs on metal imports went into place, Canada imposed counterlevies, which took effect Thursday at midnight, on $29.8-billion worth of U.S. goods, including steel, aluminum, computers, sports equipment and cast-iron products. The EU’s retaliatory measures – similar in size and calibrated to injure Republican-leaning areas of the U.S. – are set to go into effect next month.
The U.S. tariffs “are completely unjustified, unfair and unreasonable,” said Finance Minister Dominic LeBlanc. He warned that U.S. protectionist measures will hurt American and Canadian consumers and urged the Trump administration to resume talks to end the trade war. The clash has clouded this country’s economic outlook and frayed its single most important trading relationship.
Canada’s Energy Minister says all U.S. tariffs should be scrapped, not just those on oil and gas
On Wednesday, the Bank of Canada trimmed its benchmark policy rate to 2.75 per cent. Governor Tiff Macklem warned that Canada is “facing a new crisis,” and that U.S. tariffs, depending on their level and duration, could exact a severe toll.
A new round of talks intended to shape future tariffs is scheduled for Thursday, with Mr. LeBlanc and Ontario Premier Doug Ford travelling to Washington for meetings with U.S. Secretary of Commerce Howard Lutnick. Canada is seeking formal consultations on the steel and aluminum tariffs, Canada’s International Trade Minister Mary Ng said Wednesday, calling them a violation of the United States-Mexico-Canada Agreement and U.S. obligations under the World Trade Organization.
But Mr. Trump has shown no sign of wavering from his intent to enact greater barriers to trade with the U.S., saying Wednesday that global “reciprocal” tariffs promised for April 2 could extend beyond mere tit-for-tat measures. “There are some cases where they’re a little beyond reciprocal,” he said.
The President has said he is determined to restore his country’s industrial capacity and wealth, describing tariffs as a tool to spur investment and job creation inside the U.S. Mr. Trump also wants to address what he sees as other countries taking advantage of American largesse. He intends to use tariffs to remake patterns of international trade that have built up over decades.
Canada plans to impose retaliatory tariffs of $20.7 billion
The Associated Press
Unlike steel and aluminum tariffs imposed in Mr. Trump’s first term, those enacted this week contained no exceptions for individual countries – such as Canada – or types of products.
The immediate countermeasures announced by America’s other trading partners showed a determination to persuade Mr. Trump to change course. They also demonstrated the fragility of international free trade, which can take years to negotiate but only days to dismantle.
It’s all part of what Peter Navarro, an influential trade adviser, on Wednesday called “the Trump revolution.” Those changes, he acknowledged, would require a period of “transition.” But he described a future in which the economy strengthens and tariff revenues underpin “the best tax cut in American history.”
On Wednesday, Mr. Ford said he agreed in a meeting with incoming prime minister Mark Carney on the need “to stand firm and strong” against Mr. Trump’s tariffs.
Those measures “will raise costs for American businesses and families,” Mr. Ford said in a statement posted to X. Canada, he said, “won’t relent until the threat of tariffs is gone for good.”
U.S. experience has shown that tariffs can cost considerably more jobs than they create, particularly as domestic exporters feel the brunt of less welcome international markets.
The European Union on Wednesday promised countertariffs on US$28.3-billion in U.S. goods, including beef, chicken, bourbon, motorcycles and blue jeans. The new levies, which could come into place in two stages in April, will raise prices and may cost jobs in both Europe and the U.S., European Commission President Ursula von der Leyen warned.
“We deeply regret this measure. Tariffs are taxes. They are bad for business, and even worse for consumers,” she said. The EU, she said, remains “open to negotiations.”
The Chinese government faulted the U.S. for violating WTO rules, promising “all necessary measures” in response.
Many countries, however, have hesitated from immediate response. Reciprocal tariffs were not imposed Wednesday by Australia, Brazil, Mexico or Britain.
British Prime Minister Keir Starmer, who has attempted to maintain open channels to the White House in talks on Russia and Ukraine, said he would “keep all options on the table” in response to the steel and aluminum tariffs.
In Brazil, Finance Minister Fernando Haddad said the U.S. “only stands to lose” from Mr. Trump’s approach to tariffs.
Right on the U.S.-Canadian border, Corey Fram's tourism marketing job has gotten a lot harder of late. Zachary Goelman produced this report.
Reuters
Australia, too, held back from immediate response. Prime Minister Anthony Albanese instead urged a “Team Australia” approach to buying local goods and services. “Revenge” tariffs would only increase costs for Australian consumers, he said.
The White House has celebrated its approach, taking credit for a report Wednesday that showed inflation easing. “The economic news we’ve been seeing is really wonderful,” Kevin Hassett, the director of Mr. Trump’s National Economic Council, said Wednesday. He called it evidence that the policies of Mr. Trump, back in office for less than two months, “are working.”
The White House has the backing of some U.S. groups, particularly steelmakers.
“For years, countries like China have been dumping excess steel on the market at below fair market value. We just want a level playing field and tariffs are a really good tool for affecting bad actors,” said Brian Raff, a vice-president at the American Institute of Steel Construction. He dismissed concerns that the new taxes would raise costs.
“Tariffs alone have never been a primary driver for steel pricing changes,” he said.
Canadian unions and industry groups, however, said the tariffs will cause serious problems.
“Trump is knowingly inflicting damage to the North American manufacturing sector with these inflationary tariffs that will injure workers, eliminate jobs and hurt consumers,” Unifor national president Lana Payne said.
“The President’s counterproductive tariffs on steel and aluminum are ill-conceived and will only make vehicles built in the United States more expensive for Americans,” David Adams, president of the Global Automakers of Canada, said in a statement Wednesday. At the same time, he said, “the increased price of American-built vehicles sold in Canada will make those vehicles less competitive in the Canadian market.”
In Canada, meanwhile, provincial leaders continue to disagree on how best to respond, with tensions rising between Mr. Ford and Alberta Premier Danielle Smith.
Ms. Smith said she prefers a “good cop” role with the Trump White House, telling the CERAWeek by S&P Global conference in Houston that “I would rather be diplomatic and try to get to whatever the long-term relationship is going to be.”
Mr. Ford, by contrast, imposed a 25-per-cent surcharge on electricity exports to the U.S. earlier this week, a move that prompted Mr. Trump to threaten a double-strength tariff on Canadian aluminum and steel. Both men subsequently backed down from those threats, but Mr. Trump on Wednesday was derisive of the quick retreat by Ontario.
“I said this will be won in one hour,” Mr. Trump said. After announcing what he would do in response, he said, “they withdrew their little threat.”
The President also defended his whipsaw approach to tariffs, after weeks of threats followed by retreats – and then new rounds of levies.
“It’s called flexibility,” he said. “It’s not called inconsistency.”
Mr. Ford said he wouldn’t characterize his reversal of the electricity surcharge as a “backing down” but rather “respecting negotiations.”
The Ontario Premier said during his meeting in Washington with U.S. officials, “I want to find out where their bar is set.”
With reports from Laura Stone and Mark Rendell