Donald Trump’s trade war came to Europe this morning as the deal-seeking US President activated his 25 percent steel and aluminium tariffs – further destabilising the global economy.
The sizeable new tariffs, seen as a bid to by the Commander-in-Chief to reorder trade in his favour, are the latest in a series of border-hopping punitive financial measures designed by Trump to redress so-called “bad deals”. He believes the US is ultimately losing out on the world’s stage, and is now aiming to renegotiate and renege – but has come under fire from allies he has targeted.
The EU vowed today to respond with a series of its own measures this morning, as has Canada, while the UK is so far taking the tariff impact on its chin. The Government has been urged to act as the tariffs hit British steel, but an expert has warned that doing so could doubly harm the economy when it is already in a fragile state.
How will tariffs affect the UK?
Mr Trump’s tariffs have been strapped to all US imports, meaning British steel hasn’t been spared from the order despite the seemingly positive relationship shared by the President and PM Keir Starmer. The UK steel industry is a relatively small proportion of the country’s GDP, contributing around £2billion to the UK economy in 2020 and representing around 0.1 percent of total economic output.
In 2013, the UK produced 5.6million tonnes of steel, a tiny 0.3 percent of the global total. While the proportion of trade is low, the industry is spread across around 1,100 UK businesses, which support 40,000 jobs. These are expected to be directly threatened by the tariffs.
Alasdair McDiarmid, the Assistant General Secretary for steelworker’s union Community, said the tariffs will prove “hugely damaging” and threaten jobs, adding it would also blow back on the US. He said: “These US tariffs on UK steel exports are hugely damaging and they threaten jobs. For the US it’s also self-defeating, as the UK is a leading supplier of specialist steel products required by their defence and aerospace sectors.”
Dr Renaud Foucart, a senior lecturer in economics at the University of Lancaster, told the Mirror UK manufacturing – which represents nearly 20 percent of the UK’s GDP – would become more expensive.
He said: “Manufacturing today is based on deeply interconnected supply chains. This means that any tariff on material such as steel or aluminium makes production more expensive for everyone. For instance, if a US car manufacturer needs to pay 25 percent more to buy steel, this will reflect immediately on the price of cars.”
He added the overarching trade wars would have a “bad” impact, saying price increases across the supply chain would mean “we will all suffer”.
How will the tariffs affect Canada?
Canada has emerged as one of Mr Trump’s chief targets during his latest terms, with the US President seemingly keen to have the nation become the “treasured” 51st state. He has independently levelled and rescinded tariffs on his country’s vital trade partner neighbour, from which it imports the most steel.
The latest round of tariffs – which were imposed the night before the global steel tariffs activated – were ordered on steel and aluminium, with an additional 25 percent added to the existing 25 percent rate, bringing it to 50 percent. The move was a reaction to previously Trump-supporting Ontario governor Doug Ford’s move to respond to Mr Trump with a 25 percent tariff on electricity from his state.
Canadian leaders have repeatedly against tariffs coming from the US, any of which would prove nationally devastating thanks to the country’s massive economic stakes. The US is Canada’s largest trading partner, with the World Integrated Trade Solution estimating a huge 76.8 per cent share of its international exports going south of the border in 2022.
How will the tariffs affect the EU?
The European Union on Wednesday announced retaliatory trade action with new duties on US industrial and farm products, responding within hours to the Trump administration’s increase in tariffs on all steel and aluminium imports to 25 percent. The world’s biggest trading bloc was expecting the US tariffs and prepared in advance, but the measures still place great strain on already tense transatlantic relations.
The EU duties aim for pressure points in the US while minimizing additional damage to Europe. The tariffs – taxes on imports – primarily target Republican-held states, hitting soybeans in House speaker Mike Johnson’s Louisiana, but also beef and poultry in Kansas and Nebraska. Produce in Alabama, Georgia and Virginia is also on the list.
European Commission President Ursula von der Leyen told reporters this morning the bloc was hoping to “explore better solutions with the US” after ordering $28 billion (£21.6 billion) tariffs on US goods from next month. She said: “We firmly believe that in a world fraught with geoeconomic and political uncertainties, it is not in our common interest to burden our economies with such tariffs.”
EU members Germany, Ireland and Italy, all of which have a trade surplus with the US, are anticipating the most significant impact from the tariffs. In 2023, Germany’s surplus was worth €57 billion (£47.9 billion), with Ireland’s worth €50 billion (£42.1 billion) and Italy’s €41 billion (£34.5 billion).
How will the tariffs affect Ukraine?
Steel exports make up a much larger proportion of Ukraine’s economy, making up 14.6 percent of exports and 5.7 percent of the country’s total GDP. In 2023, figures showed that steel made up 57.9 percent of the country’s exports to the US, suggesting it will suffer from Trump’s latest orders.
The Ukrainian Steel Association warned in February, weeks before the tariffs came into effect, that import duties could cost the war-weary industry about 2.4billion hryvnias (£42.7million) in revenue and the government 1billion hryvnias (£17.7million) in taxes per year.
While the costs are mounting for the country in the middle of a fight for its life, Dr Foucart said the most significant impact would be the ongoing western trade war. He said: “I would say the main impact is that trade wars between Western partners (the EU, Canada, the US) play in the hands of Russia, by making us all poorer and less united. And perhaps less focused on our joint support for Ukraine.”
Which nations have been impacted by tariffs the most?
The US imports more steel from Canada than any other country, according to the US Department of Commerce, having received six million tonnes from its immediate neighbour in 2024. Brazil and Mexico, the other US neighbour, come in second and third on the tariff table, exporting 4.1 and 3.2 milion tonnes to the country respectively.
Those nations stand to lose the most financially, especially Mexico, for which steel exports to the US are worth the most – around $4.3 billion (£3.3 billion). Other nations, namely the EU, while exporting less, have decried Mr Trump’s move as damaging for global trade and international relations.
Anthony Albanese, the Prime Minister of Australia, said the tariffs went “against the spirit of our two nations’ enduring friendship”. Australia will not level tit-for-tat duties, but said those imposed on his country were “a form of economic self-harm, and a recipe for slower growth and higher inflation”.
Dr Foucart said the affected nations would likely take a specific message from the experience and ensure global production is not too dependant on a single financial partner. He said: “The main message every country will take home from this is that our production cannot be too dependent from inputs from a single partner.
“This is what Europe is trying to do by “decoupling” from China. And China by trying to reduce its dependency on exporting to the US. This implies we do not always choose the cheaper product but also think in terms of economic autonomy. Higher prices for everyone, but higher resilience also.”
How should the world respond to the tariffs?
Many countries hit by the tariffs have resolved to respond with rounds of their own against the US, and representatives for Brit workers have advised the UK government to do the same. Mr McDiarmid recommended the UK should respond with appropriate “defence measures”, including “at the very least”, matching the tariffs.
He said: “The UK’s response must include delivering a robust Carbon Border Adjustment Mechanism (CBAM) and the strongest possible trade defence measures to shield our sector from diverted imports. At a minimum we must at least match any measures taken by the EU.
“We’re incredibly disappointed that the US has decided to take this course of action and we will continue to work with steel companies and the UK Government to deliver the best possible outcome for our members and our industry.” But Dr Foucart warned that retaliatory measures may doubly hurt the economy, hitting both exporters and consumers.
He said: “While the EU and Canada seem to go for the ‘retaliation’ approach, adding their own counter measures to the US import taxes (tariffs), the UK may choose to try to weather the storm. Retaliation hurts your economy again: your exporters struggle due to US import taxes, and your own consumers and producers struggle due to domestic import taxes.
“But they have an advantage: they seem to help Trump find his senses, as evidence by the flurry of announcements and cancellation of tariffs.”
