UK seeks US trade deal as Donald Trump’s metal tariffs take effect

The UK is pushing for a trade deal with the US as tariffs imposed by US President Donald Trump on imports of steel and aluminium take effect.

The import tax introduction sparked an immediate response from the European Union on Wednesday which said it will impose counter tariffs on billions of euros of US goods.

The UK did not announce any tariffs in response as it works towards “a wider economic agreement”, despite calls from the industry to “act decisively”.

Trump hopes the tariffs will boost US steel and aluminium production, but critics say it will raise prices for US consumers and dent economic growth, as US markets sunk on Monday and Tuesday in response to recession fears.

On Tuesday, Trump u-turned on doubling the tariffs on Canada specifically in response to a surcharge Ontario had placed on electricity.

The tariffs mean that US businesses wanting to bring steel and aluminium into the country will have to pay a 25% tax on them.

The EU announced retaliatory tariffs on Wednesday in response on goods worth €26bn (£22bn).

They will be partially introduced 1 April and fully in place on 13 April.

European Union President Ursula von der Leyen said she “deeply regrets this measure” adding that tariffs are “bad for business and worse for consumers”.

“They are disrupting supply chains. They bring uncertainty for the economy. Jobs are at stake, prices up, nobody needs that, on both sides, neither in the EU or the US.”

She said the EU’s response was “strong but proportionate” and that the EU remains “open to negotiations”.

The tariffs will be imposed on “products ranging from boats to bourbon to motorbikes” it said.

In the UK, Business Secretary Jonathan Reynolds said the tariffs were “disappointing” but the UK was “focused on a pragmatic approach” and was “rapidly negotiating a wider economic agreement with the US to eliminate additional tariffs and to benefit UK businesses and our economy”.

He said the UK is “working with affected companies” and will “keep all options on the table” to respond in the national interest.

The American Iron and Steel Institute (AISI), a group representing US steelmakers, welcomed the tariffs saying they will create jobs and boost domestic steel manufacturing.

The group’s president Kevin Dempsey said the move closed a system of exemptions, exclusions and quotas that allowed foreign producers to avoid tariffs.

The US is a major importer of aluminium and steel, and Canada, Mexico and Brazil are among its largest suppliers of the metals.

Other countries also responded immediately to the move.

Australia’s Prime Minister, Anthony Albanese, said the Trump administration’s decision to go ahead with the new tariffs is “entirely unjustified”.

Albanese, who had been trying to secure an exemption to the tariffs, said Australia will not be imposing retaliatory duties because such a move would only drive up prices for Australian consumers.

Meanwhile, Canada’s Energy Minister, Jonathan Wilkinson, told CNN his country would retaliate but added that Canada is not looking to escalate tensions.

Canada, is one of America’s closest trade partners, and the largest exporter of steel and aluminium to the US.

In 2018, during his first term as president, Trump imposed import tariffs of 25% on steel and 10% on aluminium, but carve-outs were eventually negotiated for many countries.

This time the Trump administration said there will be no exemptions.

Gareth Stace, director general at industry body UK Steel, said the US move was “hugely disappointing”.

Some steel company contracts have already been cancelled or been put on hold, he said, adding that customers in the US will have to pay £100m per year extra in the tax.

He said he shared Trump’s concerns about cheap steel flooding the market, but urged for him to work with the UK rather against it.

Tariffs will “hit us hard” at a time when imports of steel into the UK are rising and the industry is “struggling” with energy prices, he said.

Unite general secretary Sharon Graham called on the government to “act decisively to protect the steel industry, adding the public sector should “always buys UK produced steel”.

Michael DiMarino runs Linda Tool, a Brooklyn company that makes parts for the aerospace industry. Everything he makes involves some kind of steel, much of which comes from American mills.

“If I have higher prices, I pass them on to my customers. They have higher prices, they pass it on to the consumer,” Mr DiMarino said, adding that he supports the call for increased manufacturing in the US but warning the president’s moves could backfire.

The American Automotive Policy Council, a group that represents car giants such Ford, General Motors and Stellantis, also echoed such worries.

The organisation’s president, Matt Blunt, said they “are concerned that specifically revoking exemptions for Canada and Mexico will add significant costs” to car makers’ suppliers.

Some economists are warning that the tariffs could help the US steel and aluminium industries but hurt the wider economy.

“It protects [the steel and aluminium] industries but hurts downstream users of their products by making them more expensive,” said Bill Reinsch, a former Commerce Department official, who is now at the Center for Strategic and International Studies.

Fear of the economic cost of Trump’s trade tariffs have sparked a selloff in US and global stock markets which accelerated this week after the US president refused to rule out the prospect of an economic recession.

Meanwhile, research firm Oxford Economics, said in a report it had lowered its US growth forecast for the year from 2.4% to 2% and made even steeper adjustments to its outlook for Canada and Mexico.

“Despite the downgrade, we still expect the US economy to outperform the other major advanced economies over the next couple of years,” its report added.

Additional reporting by Michelle Fleury in New York