Even the Koch brothers hate this.
The Trump administration announced today that it would impose hefty metal tariffs on the European Union, Canada and Mexico starting Friday, immediately provoking fears of an international trade war that sent stocks tumbling.
The measure has already been met with vows of retaliation against American businesses and now threatens the future of the North American Free Trade Agreement (NAFTA).
The action, which was first announced in March, would place a 25 percent tariff on steel and a 10 percent tariff on aluminum on the three key trading allies, which supply nearly half of America’s imported metal. It will go into effect at midnight, commerce secretary Wilbur Ross said on a call with reporters.
The European Union, Canada and Mexico allies had obtained temporary exemptions to the initial metal tariffs when they were first announced two months ago, while the Trump administration lobbied those countries for concessions on other measures to avoid the tariffs. Despite discussions with the Europeans, Ross said developments had not warranted either another temporary exemption or a permanent exemption.
The tariffs are meant to make good on the president’s long-standing promises to protect American industries, but they guarantee a fierce response from the trading partners, who have all warned the U.S. that they plan to impose retaliatory taxes on U.S. exports in return, as well as American businesses that use steel and aluminum, which are seeing their costs rise as a result of the plan.
As of 2:30pm, the Dow was down 257 points on the news.
Canada just announced plans to slap dollar-for-dollar tariffs on us. The NAFTA partner’s proposed import taxes would also cover whiskey, orange juice and other food products alongside the steel and aluminum tariffs.
The EU has previously said it will impose its own tariffs on U.S. products such as motorcycles and jeans. That message has been reinforced by the German Finance Minister Olaf Scholz who said in an interview with Reuters that the EU’s response to the tariffs must be “clear, strong, and smart.”
The retaliatory tariffs are likely to result in loss of jobs and higher prices. For instance, the Beer Institute — an industry group that represents US brewers — warned that aluminum tariffs would drive up the price of beer cans. The Beer Institute estimated that the increased costs would in turn force brewers to save money in other areas, such as by laying off workers or raises the prices paid by consumers.
Many economists are not ready to call this a trade war, but most liken it to a “skirmish” and a “slow-motion train wreck”.