RETALIATION FEARED AS US IMPOSES METAL TARIFFS ON EU, CANADA AND MEXICO

▶ Move follows lack of progress on trade talks, US commerce secretary says

The Trump government announced it is imposing tariffs on steel and aluminium imported from the European Union, Canada and Mexico, in a move almost certain to trigger retaliation by America’s closest allies.

The decision came hours before temporary exemptions were due to elapse at 12.01am in Washington on Thursday.

The move marks the Trump government’s most aggressive trade action yet against major US trading partners, which had been asking for permanent relief. US Commerce Secretary Wilbur Ross said there wasn’t enough progress in discussions with the EU over trade concessions and Canada and Mexico on rewriting the North American Free Trade Agreement (Nafta) to give them permanent exemptions from the metals tariffs. “We continue to be quite willing and eager to have further discussions with all of those parties,” Mr Ross told reporters on a conference call on Thursday. “We are awaiting their reaction.”

Stocks in the US fell as the government ignored pleas from business lobbying groups, including the US Chamber of Commerce, to waive tariffs.

Mr Ross said he’s looking forward to “continued negotiations” with Canada, Mexico and the EU “because there are other issues” that need to be resolved. There’s potential “flexibility” in the future because the president has the power to increase or cut tariffs, remove them, or enact quotas, he said.

Fears of a global trade war are mounting as the Trump government also considers tariffs on US vehicle imports and duties on $50 billion (Dh183.7bn) in Chinese goods.

The International Monetary Fund has warned that a wave of protectionist forces are the biggest risk to the global economic outlook.

In imposing the tariffs, President Donald Trump invoked a seldom-used section of a 1960s trade law that allows him to erect trade barriers when imports imperil national security.

Mr Trump in March imposed 25 per cent duties on imported steel and 10 per cent on aluminium, but he gave temporary reprieve to a handful of allies for further talks to take place.

The EU had said it wouldn’t make trade concessions to gain a permanent exemption, and vowed to respond firmly to the imposition of tariffs.

The 28-member bloc has threatened to complain to the World Trade Organisation and impose counter-tariffs on €2.8bn (Dh12.01bn) of American imports as soon as June 20. EU Trade Commissioner Cecilia Malmstrom has said the details of the US decision would guide the EU’s response.

Canada and Mexico also rejected the Trump government’s suggestion of linking tariff relief to the outcome of ongoing talks to revamp Nafta.

Canada will respond “appropriately” to any steel and aluminium tariffs, Foreign Minister Chrystia Freeland said on Wednesday, while Mexican Economy Minister Ildefonso Guajardo said earlier this year that retaliation is an option.

Mr Trump imposed the tariffs in March after his US Commerce Department declared that steel and aluminium imports undermine the country’s manufacturing base and threaten national security. The action was mainly targeted at China over accusations of flooding the global market with cut-rate metals and dragging down prices. The Trump government has said a global tariff is necessary because China is shipping its steel through other nations.

The White House action comes as the Trump government begins a similar national-security investigation into vehicle imports, which could lead to tariffs. The probe was seen as an attempt to pressure Mexico and Canada over a Nafta deal.

They are the two biggest suppliers of foreign vehicles to the US. Nafta negotiations are “taking longer than we had hoped. There is no longer a very precise date when they will be concluded,” Mr Ross said on Thursday.

The steel and aluminium levies and vehicle-import probe could play well with Trump voters in Rust Belt states in the lead-up to congressional midterm elections in November.