President Donald Trump has ended the 2018 exemptions and officially imposed 25% tariffs on steel and aluminum imports from Canada, Mexico, China, the EU, Brazil, and South Korea. This move follows his February plan to reduce foreign imports and boost US employment.
New Tariffs and Their Impact
Trump expects these tariffs to boost domestic production growth. However, economists are concerned about potential recession risks. Since the discussion of these plans, the S&P 500 has dropped 8%. According to a U.S. International Trade Commission report, aluminum and steel producers gained $2.3 billion due to increased demand, while downstream manufacturers lost $3.5 billion.
Response from Other Countries and Companies
Companies like Volvo, Volkswagen, and Honda have shown interest in expanding operations in the US. However, critics warn that higher prices might lead to lower sales and profits. John Murphy, senior vice president at the US Chamber of Commerce, questions whether boards are ready to approve such expansions under the current conditions.
EU's Countermeasures
The European Union announced countermeasures, imposing new tariffs on US goods worth $28 billion. EU Commission President Ursula von der Leyen emphasized that these measures match the economic scope of the US tariffs. The countermeasures will be introduced in two steps, starting April 1st and fully in place by April 13th.
The measures and corresponding responses from various countries highlight increasing tensions in international trade. This poses a significant challenge for policies aimed at protecting domestic industries, and their success will depend on subsequent actions by the US and its trading partners.
