President Trump’s trade war is officially underway as the United States will begin implementing steel and aluminum tariffs on key allies including Canada, Mexico and the European Union.
The move comes after months of discussions and will now result in a 10 percent tariff on aluminum imports and a 25 percent tariff on steel imports staring June 1st.
In a statement, the White House said “The United States was unable to reach satisfactory arrangements … with Canada, Mexico or the European Union after repeatedly delaying tariffs to allow more time for discussions.” The White House went on to say they were able to reach agreements with a number of other countries including Australia, Argentina, Brazil and South Korea.
The White House defended the move by invoking national security as it stated excessive levels of aluminum and steel imports threatened to impair the security of the United States. According to their justification, imports can reduce America’s domestic production capacity and the country could find itself in a “situation where the United States would be unable to meet demand for national defense and critical infrastructure in a national emergency.”
Unsurprisingly, the countries hit by the tariffs are fighting back. The President of the European Commission, Jean-Claude Juncker, said “The EU believes these unilateral US tariffs are unjustified and at odds with World Trade Organization rules.” He added, “This is protectionism, pure and simple.”
The European Union notes the tariffs affect exports worth €6.4 ($7.4) billion and they will launch legal proceedings against the United States in the World Trade Organization tomorrow. According to Juncker, “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 European Union isn’t the only one hitting back at the US as Mexico said it will “impose equivalent measures to various products” such as steel, lamps and a variety of food items including apples, grapes, pork and sausages. Mexico’s Ministry of Economy went on to say “Mexico reiterates its openness to constructive dialogue with the US, its support for the international trading system and its rejection of unilateral protectionist measures.”
The tariffs and retaliatory measures will hit a number of companies and products. US automakers are one of the many victims as higher aluminum and steel prices will make vehicles more expensive to produce. These increased costs will likely be passed onto consumers.