In a move that would possibly stir a trade war, the United States on Thursday imposed harsh tariffs on steel and aluminium imports from the European Union, Canada and Mexico.
The decision was announced by US Commerce Secretary Wilbur Ross in an early phone call. He said that the White House will add a 25 per cent import tariff on steel and 10 per cent tariff on aluminium after trade talks crumbled ahead of a June 1 deadline that would have enabled exemptions.
Meanwhile, the move has drawn outrage from America's closest allies and major trading partners. The European Commission fired back at the US trade tariff decision with a lawsuit saying that the EU "stands now ready to react to the US trade restrictions on steel and aluminium in a swift, firm, proportionate and fully WTO-compatible manner." The EU added that it would launch legal proceedings against the US in the World Trade Organisation on Friday.
Canada on the other hand, hit back at steep US tariffs on aluminum and steel, announcing retaliatory duties on up to 12.8 billion US dollars in American imports.
Prime Minister Justin Trudeau said that the the US tariffs were "totally unacceptable."
Speaking at a news conference, Trudeau said; "these tariffs are an affront to the long standing security partnership between Canada and the United States, and in particular, an affront to the thousands of Canadians who have fought and died alongside their American brothers in arms".
The Canadian tariffs, which Foreign Minister Chrystia Freeland said are proportional to the US duties, will be applied to US steel and aluminum as well as consumer products from July 1.
These items include yogurt, coffee, sugar, toilet paper, sailboats, mattresses, washing machines and lawn mowers - all aimed at exerting pressure on key US states that export a lot to Canada.
Meanwhile, French President Emmanuel Macron in a phone call told US President Donald Trump that the imposition of tariffs on the steel and aluminium imports from the European Union were illegal and the EU would respond in a 'firm and proportionate manner'.
Mexico’s Ministry of Economy released a statement saying, “Mexico deeply regrets and rejects the decision of the United States to impose these tariffs on imports of steel and aluminum from Mexico as of June 1, under the criterion of national security. Mexico will impose equivalent measures to various products in the face of U.S. protectionist measures.”
Well, the market reaction was also swift- The Dow Jones fell sharply after the move was announced, dropping by 250 points as investors took measure of the impact of the ongoing trade tensions, and falling to 300 points after Canada's retaliation.