Live Updates: Europe Retaliates Against Trump’s Metals Tariffs as Trade War Widens
As President Trump’s global tariffs against steel and aluminum took effect, the European Union said it would impose up to $28 billion in levies on U.S. goods. The latest escalations added to the trade turmoil unsettling the world economy.
Global trade turmoil deepened on Wednesday as the European Union announced up to about $28 billion in retaliatory tariffs on U.S. exports, shortly after President Trump’s across-the-board levies on steel and aluminum imports took effect.
The latest escalations in the trade war instigated by Mr. Trump came hours before the release of the latest reading of the U.S. Consumer Price Index, which was forecast to show that inflation remained stubbornly high in February. That would be an unwelcome sign for the Federal Reserve as it grapples with the prospect of a sharp slowdown in U.S. economic growth as a result of the trade war.
Mr. Trump has appeared undeterred by the uncertainty and fear that his tariffs, against friends and foes alike, have injected into the global economy. He has not ruled out the possibility that his policies could cause a recession in the United States.
The European Union said its retaliatory tariffs, which would take effect April 1, were proportionate to about $26 billion in tariffs applied by the United States. But European officials, already facing a lackluster economy, emphasized that they were ready to strike a deal with the Trump administration. “Jobs are at stake, prices up — nobody needs that,” said Ursula von der Leyen, president of the European Commission.
No other countries immediately announced further retaliation. China did not directly address the U.S. tariffs, although its Foreign Ministry spokeswoman said the government would take “firm measures” to safeguard its interests.
The 25 percent tariffs on imports of steel and aluminum have the support of U.S. domestic producers. But they could hit a range of industries, including car manufacturing, and potentially slow down the American economy.
Mr. Trump issued tariffs on Canada, Mexico and China last week, before quickly walking some of them back. Countries hit by the tariffs have vowed to retaliate with their own penalties, which will most likely hurt U.S. exporters.
Here’s what else we’re covering:
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Metal suppliers: The latest tariffs will hit producers across several continents. Canada is the largest supplier of steel and aluminum to the United States. Brazil, Mexico, South Korea and Vietnam are also among the top suppliers of steel, while the United Arab Emirates, Russia and China are leading sources of aluminum. Among European countries, Germany is a major steel producer.
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Some U.S. allies hold back: Britain has chosen not to retaliate, as Prime Minister Keir Starmer looks to sign a long-term trade deal with the United States. And Prime Minister Anthony Albanese of Australia said his country would not impose reciprocal tariffs because they would hurt domestic consumers.
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Spooked markets: Stocks in Asia on Wednesday slightly moderated after a volatile day of trading, though shares in Australia fell for a second day. Wall Street markets have whipsawed this week, and shares of some big automakers, including Ford and Stellantis, have suffered losses.
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Economic impact: The release of the latest U.S. inflation data on Wednesday morning, and Mr. Trump’s threat that more tariffs could be on the way, will only add to worries about rising prices.The president has said he could impose penalties on foreign cars and other “unfair” relationships. Automakers were already unnerved by the prospect of higher steel prices after Mr. Trump opposed Nippon Steel’s proposed acquisition of U.S. Steel, a move that they worry will reduce competition for a crucial metal.
The European Union is putting tariffs on a range of products from the United States in retaliation to President Trump’s steel and aluminum tariffs, and items that come from Republican-held states rank high on the hit list.
The European Union plans to institute the tariffs in two phases: The first wave will take hold on April 1, and will impact goods that already had tariffs applied during Mr. Trump’s first term, such as bourbon, boats and motorcycles. For certain products like whiskey and Harley-Davidson motorcycles, those tariffs would be as much as a crushing 50 percent.
The second wave is still being figured out, though the list of products that could be affected is already public — and is 99 pages long. In that phase, the E.U. is planning to add levies to goods worth about 18 billion euros, or 19.6 billion dollars, and is aiming for them to go into effect on April 13.
The proposed goods include:
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Poultry, beef and pork
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Soybeans
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Wine and sparkling wine
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Beer
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Pants, shirts and other clothing
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Handbags
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Refrigerators
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Washing machines
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Mowers
Exactly what those tariffs will look like remains to be seen. For now, Europe is consulting consumers, companies and policymakers across the 27-nation bloc as it finalizes the list. Many of the potential targets are largely produced in Republican-held areas, such as crops from the Louisiana district that elected Mike Johnson, the House speaker, and livestock from Nebraska and Kansas.
The goal? Officials want to hit America where it hurts in order to force the United States to the negotiating table, while doing as little damage as possible to Europeans.
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Britain is parting company with the European Union by not retaliating to the tariffs that President Trump imposed on steel and aluminum imports on Wednesday, as Prime Minister Keir Starmer calculates that he can negotiate a trade deal with the United States that would spare his country in the long term.
The approach contrasts sharply with that of the European Union, which hit back swiftly with retaliatory measures on American exports, including Harley-Davidson motorcycles, bourbon and jeans, and top European officials have warned about the uncertainty Mr. Trump’s policies are causing. By contrast, British officials have expressed only muted disappointment that they have been swept into Mr. Trump’s protectionist net.
“We are focused on a pragmatic approach and are rapidly negotiating a wider economic agreement with the U.S. to eliminate additional tariffs and to benefit U.K. businesses and our economy,” Jonathan Reynolds, Britain’s trade and industry secretary, said.
Mr. Reynolds added that Britain was not taking any potential action off the table. But Mr. Starmer, who has energetically lobbied Mr. Trump to exempt the country from tariffs, believes that he can ultimately persuade Mr. Trump that Britain’s trade relationship with the United States is balanced.
Britain runs either an $89 billion trade surplus or a $14.5 billion deficit with the United States, depending on whether one cites British or American statistics. The difference rests in part on how the two sides treat offshore financial centers such as Jersey and Guernsey, which are crown dependencies.
“He was working hard, I’ll tell you that,” Mr. Trump said, after Mr. Starmer lobbied him against tariffs at a White House meeting late last month. “He earned whatever the hell they pay him over there.”
Mr. Starmer has also been pushing Mr. Trump to provide American security guarantees to Ukraine as part of a peace negotiation with Russia. The two leaders have spoken regularly by phone since their meeting, as Mr. Starmer has tried to help heal Mr. Trump’s rift with President Volodymyr Zelensky of Ukraine.
But Britain’s decision not to retaliate to the tariffs could complicate Mr. Starmer’s other big priority: to draw his country closer to the European Union after Brexit. The crisis over Ukraine has given the prime minister a chance to collaborate with the European Union on defense and security, and he clearly hopes it could lead to closer trade and economic links.
The divergent responses to the tariffs are a reminder that, in some respects, Britain still faces a choice between the United States and Europe.
Daisuke Wakabayashi and Joe Rennison
Daisuke Wakabayashi reported from Seoul and Joe Rennison from New York.
Stocks rose on Wednesday after a tumultuous few days of trading following President Trump’s decision to impose tariffs on some of the United States’ biggest trading partners and retaliatory measures by the European Union, China and Canada.
Futures on the S&P 500, which allow investors to trade ahead of exchanges opening, were slightly higher. The Euro Stoxx 50 index, which comprises the eurozone’s largest listed companies, was up more than 1 percent in morning trading. Shares in Britain, Germany and France all broadly gained.
In Asia, stock markets in Japan, South Korea and Taiwan nudged higher. Those indices were seen as among the most exposed if President Trump broadened tariffs on longstanding trading partners. Hong Kong’s Hang Seng Index, a market that had been a bright spot in Asia, fell nearly 1 percent — a fourth straight day of decline.
As stock markets seemed to regain their footing on Wednesday, the European Union said it was implementing tariffs in retaliation to Mr. Trump’s 25 percent duty on steel and aluminum imports, which went into effect earlier in the day.
The European Commission called the U.S. tariffs on steel and aluminum “unjustified.” It said it would impose levies on a wide range of American goods that would take effect on April 1. Ursula von der Leyen, the president of the European Commission, said the tariffs were nearly equal in value to the metals duties being applied by the Trump administration.
The rise in stock prices reversed some of losses from earlier in the week and followed another turbulent trading day on Wall Street, after the White House introduced and then rolled back new tariffs. The whipsaw on tariffs has added to investors’ confusion over the Trump administration’s economic policy.
Recent waves of selling have left the S&P 500 index nearly 10 percent below its mid-February record. Falling more than 10 percent would signify a symbolic milestone known on Wall Street as a correction.
“Uncertainty breeds volatility,” said Alan McKnight, chief investment officer at Regions Bank. “Right now the level of uncertainty continues to ratchet up.”
The CBOE’s Vix volatility index, known as Wall Street’s fear gauge, has risen in recent days, a sign of investor jitters.
“Investors are having a tough time discerning what they should expect on a go forward basis,” Mr. McKnight said. “It’s not just about it being good or bad. It’s about getting some clarity.”
The volatility is extending to how foreign investors are moving money in and out of markets in Asia. Khoon Goh, head of Asia Research at Australian bank ANZ, said foreign investors are turning “cautious” because of uncertainty regarding U.S. trade policy.
“Rising investor concerns over the impact of tariffs on U.S. growth is spilling over into Asian equities,” Mr. Goh wrote in a report.
Shares in Australia fell for a second straight day after the White Houseruled out any exceptions or exemptions on its steel and aluminum tariffs. Last month, Mr. Trump said he would give “great consideration” to exempting Australia because it buys more goods from the United States than it sells. During Mr. Trump’s first term, he exempted Australia from steel and aluminum tariffs.
Anthony Albanese, Australia’s prime minister, said he would not impose reciprocal tariffs because they would only hurt Australian consumers by pushing up prices. But he condemned tariffs as an economic policy, calling them “a form of economic self-harm and a recipe for slower growth and higher inflation.”
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France’s European affairs minister, Benjamin Haddad, said on Wednesday that Europe had the capacity to add to the list of tariffs it had already imposed. “We have the means, if we so wish, to go further,” he said in an interview with French television channel, TF-1, citing intellectual property and digital services as potential targets.
Christine Lagarde, the president of the European Central Bank, warned that the level of uncertainty caused by the trade war and shifting international alliances was “exceptionally high” and could make it harder to manage inflation. “Our expectations have indeed been swept aside in the last few years, and in the last few weeks in particular,” she said at a meeting of E.C.B. officials, economists and analysts. “We have seen political decisions that would have been unthinkable only a few months ago.”
Inflation is expected to have stayed stubbornly high in February, an unwelcome sign for the Federal Reserve as it grapples with the prospect of a sharp slowdown in growth as a result of President Trump’s trade war.
The latest reading of the Consumer Price Index, set for release on Wednesday, is forecast to have risen 2.9 percent from a year earlier, according to estimates from economists compiled by Bloomberg. That would represent a 0.3 percent monthly gain, a deceleration from January’s surprisingly large 0.5 percent increase but high enough to keep the central bank on edge about how it handles price pressures.
The “core” measure of inflation, which strips out volatile food and fuel prices to give a better sense of the underlying trend, is also expected to remain high. Economists predict a rise of 0.3 percent compared to the previous month, or 3.2 percent from a year earlier.
The data from the Bureau of Labor Statistics is expected to provide the latest evidence that progress toward the Fed’s goal of 2 percent inflation has almost come to a standstill. Prices for consumer staples, such as eggs and other grocery items, are rising steeply again, along with services including airfares, hotel costs and automobile insurance.
Economists worry that Mr. Trump’s tariffs and the global trade war they have provoked will not only add to prices, but also dent growth. Uncertainty about the trajectory of the president’s trade policies have amplified those fears.
Those concerns have also materialized in recent measures tracking how consumers feel about the future. According to the latest survey from the Federal Reserve Bank of New York, consumers’ expectations about their financial situation in the year ahead “deteriorated considerably,” as they braced for inflation sticking to around 3.1 percent. The share of consumers now expecting to be in a worse situation financially a year from now rose to its highest point since November 2023. The average perceived likelihood of missing a future debt payment rose to the highest level since April 2020.
A combination of slowing growth and resurgent price pressures puts the Fed in a difficult position, given its mandate to pursue low, stable inflation as well as a healthy labor market.
As of January, Fed officials justified their ability to hold off on another round of interest rate cuts and wait for more progress on inflation because the economy was doing well. If that resilience starts to show signs of cracking before inflation is fully vanquished, the Fed may be more limited in how it responds.
When the Fed had to deal with a trade war during Mr. Trump’s first term, it lowered interest rates by a total of three-quarters of a percent in 2019 in an effort to protect the economy from weakening further.
In his most detailed comments yet about Mr. Trump’s latest round of tariffs, Jerome H. Powell, the Fed chair, acknowledged last week that the context this time was different. “We came off a very high inflation and we haven’t fully returned to 2 percent on a sustainable basis,” he said at an event on Friday.
Mr. Powell added that the Fed’s typical response to tariffs would be to “look through” any one-time increase, but stressed that officials would be watching for any shocks and how long-term inflation expectations were shifting. “As we parse the incoming information, we are focused on separating the signal from the noise as the outlook evolves,” he said. “We do not need to be in a hurry, and are well positioned to wait for greater clarity.”
That suggests the Fed will extend its pause on rate cuts when officials gather next week, maintaining the current range of 4.25 to 4.5 percent.
Traders in futures markets are betting that the Fed will be able to cut rates three times this year, each by a quarter of a point. That is more cuts than predicted just a couple of weeks ago, reflecting rising anxiety about the economic outlook.
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President Trump’s imposition of tariffs on all steel and aluminum imports could make it more expensive to produce cars in the United States, dealing another blow to automakers already facing the potential of rising steel prices because of other policies from his administration.
Top of mind for auto executives was the bid by the Japanese steel maker Nippon Steel to buy U.S. Steel. Many of them had hoped that Mr. Trump would be open to negotiating a deal to allow the acquisition to go ahead. Instead, the president confirmed last month that he opposed the proposed deal.
Many auto industry executives believe that the merger could have increased competition and supply in the American steel industry, ultimately lowering steel prices.
In the United States, U.S. Steel and Cleveland-Cliffs are the only major American producers of the high-finish steel favored by automakers. Cleveland-Cliffs has long sought to acquire its rival, but such a merger has raised concerns in the auto industry that it could create a monopoly, giving the combined company the power to raise prices.
By contrast, industry groups expected the proposed Nippon Steel deal to preserve competition in the market. The Alliance for Automotive Innovation, a trade group representing major U.S., Japanese, and European automakers, expressed support for Nippon Steel’s acquisition, saying that a Cleveland-Cliffs-led deal would result in “anti-competitive pricing of materials.”
Even after former President Joseph R. Biden Jr. rejected the deal in January, Nippon Steel continued efforts to revive it. Cleveland-Cliffs has recently indicated that it remains interested in bidding for the financially troubled U.S. Steel. Last month, Mr. Trump reiterated that U.S. Steel must remain American-owned, and said he would block Nippon Steel from taking a controlling stake in the company.
For automakers struggling with challenges such as rising competition from Chinese rivals, costly technological transitions, and signs of a slowdown in U.S. consumer spending, the new steel tariffs are expected to further squeeze profits. The 25 percent levies, which went into effect on Wednesday, are expected to cause steel prices in the United States to rise about 16 percent compared to prices in 2024, according to the research firm Wolfe Research.
Japan’s chief cabinet secretary, Yoshimasa Hayashi, said the imposition of the new U.S. tariffs without an exemption for Japan was “regrettable.” Imports from Japan are crucial to the competitiveness of American manufacturing and have significantly contributed to the U.S. economy and jobs, Hayashi said at a news conference.
Japan exports only small amounts of aluminum to the United States, but it is America’s sixth-largest source of foreign steel.
President Trump’s mercurial approach to trade policy is creating volatility in investment flows from Asia’s foreign investors. Khoon Goh, head of Asia Research at the Australian bank ANZ, said foreign investors are turning “cautious” due to uncertainty regarding U.S. trade policy. “Rising investor concerns over the impact of tariffs on U.S. growth is spilling over into Asian equities,” Goh wrote in a report.
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The spokeswoman for China’s Ministry of Foreign Affairs, Mao Ning, repeated Beijing’s position that recent American trade policies violate the World Trade Organization’s free trade rules. “We will take firm measures to safeguard our legitimate rights and interests,” she said, without providing details of possible responses by China.
European Union leaders have been clear that they want to negotiate with the United States on trade to avoid a full-blown conflict. But with no deal in sight, officials announced a plan on Wednesday that is meant to hit back hard as steel and aluminum tariffs come into effect.
President Trump has imposed 25 percent tariffs on all global steel and aluminum imports, including products that contain those metals, such as cookware and window frames. Given that breadth, the European Union said that the U.S. levies might affect some 26 billion euros — $28 billion — of the bloc’s exports.
So the bloc announced a plan that is meant to retaliate in equal measure.
The response will come in two parts. The bloc had increased tariffs on a range of goods in retaliation to U.S. measures during Mr. Trump’s first term, but they were suspended under the Biden administration. That suspension will be allowed to lapse on April 1, increasing tariffs on billions of euros worth of products that include boats, bourbon and motorcycles.
The bloc’s second step, it said, would be to place tariffs on about €18 billion worth of additional products. Representatives from countries across Europe will consult for two weeks before officials finalize the list of affected products.
Items that have been proposed for inclusion are industrial and agricultural. They are meant to target products — including soybeans, beef and chicken — that are important exports from Republican strongholds. Those include the Louisiana district that elected Mike Johnson, the House speaker.
The goal is to have the new measures in force by mid-April.
The announcement was Europe’s opening move in an unfolding trade conflict — one that is widely expected to intensify over the month ahead.
For the bloc, the American steel and aluminum tariffs are just the start of what Mr. Trump has threatened. He has repeatedly vowed to set wide-ranging tariffs on American trading partners globally as soon as April 2. He has suggested that levies on cars in particular could be 25 percent, a figure that would be painful for German and Italian automakers.
“We’re now in this escalating spiral,” said Carsten Brzeski, the global head of macro research at the bank ING.
On the one hand, the European Union does not want to escalate the trade war. European officials have called tariffs “economically counterproductive,” warning that a tit-for-tat tariff fight would harm everyone involved.
“Tariffs are taxes,” Ursula von der Leyen, the president of the European Commission, the bloc’s executive arm, said in a televised statement on Wednesday. “Jobs are at stake, prices up, nobody needs that.”
But the Trump administration has been reluctant to negotiate, which is pushing European policymakers to adopt a more aggressive stance.
“I traveled to the U.S. last month; I was seeking constructive dialogue to avoid the unnecessary pain of measures and countermeasures,” Maros Sefcovic, the European Commission’s top trade official, said during a news briefing this week. “In the end, as it is said, one hand cannot clap. The U.S. administration does not seem to be engaging to make a deal.”
E.U. leaders emphasized on Wednesday that the bloc’s response is intended to be proportionate, and Mr. Sefcovic stressed that they were avoidable “if the U.S. administration accepts our extended hand.”
Mr. Trump’s tariffs come at a tough moment for the European economy. After several years of flagging growth, businesses across the bloc are staring down the prospect of worsening trade conditions that could hurt their overseas business.
Groups representing the German steel industry, for instance, have said that the tariffs come at an “inopportune time,” when producers in the European Union are dealing with cheap competition from China.
Europe has not been caught by surprise, at least. A trade-focused group within the European Union, colloquially called the “Trump task force,” spent much of last year preparing for various trade conflict scenarios.
But it has been hard for Europeans — and other American trading partners — to decide how to respond. It is also not clear what Mr. Trump’s goals are or which ones will ultimately be retained, because his administration has made a habit of threatening and then backtracking, at least temporarily.
“It’s hard to know what is going to stick and what’s not going to stick,” said Michael Strain, the director of economic policy studies at the American Enterprise Institute in Washington, which recently hosted an event with Mr. Sefcovic.
European officials have also struggled to get their American counterparts on the phone. Ms. von der Leyen has not spoken individually with Mr. Trump since his inauguration.
Asked at a news conference on Sunday when she might speak to him, she said: “We will have a personal meeting when the time is right.”
Kaja Kallas, the bloc’s chief diplomat, was supposed to meet with Marco Rubio, the American secretary of state, in Washington in late February, but Mr. Rubio canceled that meeting.
And diplomats from across the European Union and its member countries have struggled to identify whom to talk to in the Trump administration, in part from a lack of clarity about how decisions are being made.
“I do think there’s a level of consternation at the objectives of the administration,” said Jörn Fleck, senior director with the Europe Center at the Atlantic Council, a Washington-based research institution.
He said that Europe might struggle more to respond in a world in which the United States does not want to simply make a deal, but rather wants to fundamentally reorder the global trade order so that more is produced in the United States.
“Maybe there isn’t any deal to be had,” he said.
India is a steel and iron exporter, though it’s not one of the countries most affected by the new U.S. tariffs. Only a fraction of the $33 billion worth of steel imported by the United States in 2024 came from India. But President Trump’s tariffs are weighing heavily on Indian minds this week.
India’s commerce minister, Piyush Goyal, just returned from a weeklong trip to Washington and it has been reported that he will travel there again later this month. On Tuesday, the White House singled out India for its high tariffs on alcohol and farm products.
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“Jobs are at stake, prices up — nobody needs that,” Ursula von der Leyen said in a televised address from Strasbourg, France. The E.U. is trying to emphasize that these tariffs are proportionate: They do not want to make this trade war worse, they seem to be stressing. They want to bring America to the negotiating table.
The E.U.’s 99-page list of American products that could be impacted by its new tariffs includes everything from women’s blouses to frozen fowl to raspberries. The bloc is asking for public feedback on its list, and the idea is that it will be edited and finalized before mid-April. The goal is to hit products that will hurt the U.S. but minimize disruption for Europeans.
South Korea’s trade minister, Cheong In-kyo, will visit Washington this week to try to find ways of “minimizing” the impact of the Trump administration’s new tariffs on the South Korean economy, his office said in a statement. He planned to meet with senior American officials, including the U.S. trade representative, during the two-day trip that will begin on Thursday, it said.
Neil Western
South Korea is among the countries that will be most affected by the tariffs. It is one of the top foreign exporters of the metals to the United States, ranking fourth for steel last year, according to the U.S. International Trade Administration. It has exported nearly 2.8 million tons of steel to the United States since March 2024.
According to data from the American Iron and Steel Institute, five of the top ten steel exporters to the United States are in Asia. Last year, more than one-third of U.S. steel imports came from Canada and Mexico. Another quarter was sourced from South Korea, Vietnam, Japan, Taiwan and China. South Korea was the largest Asian exporter, accounting for roughly 10 percent of U.S. steel imports.
Britain’s trade secretary, Jonathan Reynolds, said on Wednesday that the new tariffs were “disappointing.” The country was negotiating a wider economic agreement with the U.S. to eliminate additional tariffs, he said in a statement. “We will keep all options on the table and won’t hesitate to respond in the national interest.”
In a separate statement, the British Chambers of Commerce said that the new tariffs would hit consumers and businesses in both Britain and the United States. It added that retaliatory tariffs should only be an option of last resort.
“Tariffs mean prices and costs will inevitably go up and this is a lose-lose scenario for consumers, businesses, and economic growth,” William Bain, the group’s head of trade policy, said in a statement.
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This move from the E.U. is like the opening bid in a chess game. Officials know that President Trump has promised further tariffs on Europe as soon as April 2, so the U.S.-E.U. trade conflict is likely to escalate further. This response is narrowly focused on steel and aluminum, but it’s a first glimpse of what is coming.
The E.U.’s 2018 and 2020 countermeasures — the ones now set to snap back on April 1 — were a response to Trump’s first-term trade war. The bloc designed them to inflict maximum political pain in America with minimum pain for Europe. For instance, they hit Kentucky Bourbon hard, because that would impact then-Senate Majority Leader Mitch McConnell.
These E.U. countermeasures come after weeks in which European officials have struggled to negotiate with their American counterparts. “One hand cannot clap,” Maros Sefcovic, the European commissioner on trade, said earlier this week in Brussels.
The European Commission said it is imposing countermeasures on U.S. exports to the European Union, calling President Trump’s tariffs on steel and aluminum unjustified. “The countermeasures we take today are strong but proportionate. As the U.S. are applying tariffs worth $28 billion, we are responding with countermeasures worth €26 billion,” Ursula von der Leyen, the president of the European Commission, said in a statement.
The commission had suspended earlier countermeasures that it imposed in 2018 and 2020, and said it would allow that suspension to end on April 1. It said it would put forward additional countermeasures in response to U.S. tariffs that would come into force by mid-April.
Von der Leyen said the European Union was ready to have a meaningful dialogue on trade with the United States. “It is not in our common interest to burden our economies with tariffs,” she said.
Shares in Australia fell for a second straight day. The slide came after the White House said it would proceed with steel and aluminum tariffs and ruled out exceptions for any country. Last month, President Trump said he would give “great consideration” to exempting Australia because it buys more goods from the United States than it sells. During Trump’s first term, he exempted Australia from steel and aluminum tariffs.
Anthony Albanese, Australia’s prime minister, said he will not impose reciprocal tariffs because they would only hurt Australian consumers by pushing up prices. He condemned tariffs as an economic policy, calling them “a form of economic self-harm and a recipe for slower growth and higher inflation.” Steel and aluminum sales to the United States account for less than one percent of the country’s total exports, Albanese noted.
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Stocks in South Korea, Taiwan and Japan rose about 1 percent in midday trading, reversing some of the losses from earlier in the week. Those markets were seen as among the most exposed if President Trump continued to broaden tariffs on longstanding Asian trading partners. On mainland China and in Hong Kong, key indexes were slightly lower.
Ana Swanson and Jeanna Smialek
Ana Swanson reported from Washington and Jeanna Smialek from Brussels.
President Trump’s sweeping tariffs on foreign steel and aluminum went into effect on Wednesday, escalating America’s trade spats with global competitors, including close allies already reeling from his on-and-off approach to trade penalties.
Mr. Trump’s tariffs of 25 percent on the metals hit imports that enter the United States from any country in the world. The move, which many domestic steel and aluminum makers support, is expected to raise costs for American manufacturers of cars, tin cans, solar panels and other products, potentially slowing the wider U.S. economy.
The action on metals was just the latest attempt by Mr. Trump to leverage the power of tariffs and the American market against foreign governments. Last week, he issued steep tariffs on imports from Canada, Mexico and China, blaming those countries for the entry of drugs and migrants into the United States, before quickly paring some of them back. The president is threatening to impose a raft of other tariffs, including on foreign cars and against countries that he says discriminate against the United States.
His approach has been met with a market slump and has sent many U.S. allies into a defensive mode as they try to decipher what the president actually wants. On Tuesday, Mr. Trump threatened to double the tariffs on Canadian metal after Ontario had responded to Mr. Trump’s previous tariffs by putting a surcharge on electricity exported to the United States. Within hours, Ontario had suspended its surcharge, and Mr. Trump walked back his threats.
The metal tariffs, and other levies to come, are likely to again worsen trade disputes. Foreign governments, including in Canada, have vowed to retaliate by issuing levies that will most likely hurt U.S. exporters. On Wednesday, Europe swiftly announced tariffs on up to $28 billion worth of goods in response. The metal tariffs mainly affect U.S. allies: Canada is by far the largest supplier of both steel and aluminum to the United States. Brazil, Mexico, South Korea and Vietnam are also top suppliers of steel, while the United Arab Emirates, Russia and China are top suppliers of American aluminum.
The tariffs restore and expand similar measures that Mr. Trump put in place in 2018, which ushered in several long-running trade wars. Mr. Trump argued that the tariffs were needed to protect national security and provide a reliable source of metal for the military in wartime.
In the intervening years, both Mr. Trump and former President Joseph R. Biden Jr. made deals with foreign countries, including Brazil, Mexico, Canada and nations in Europe, that whittled away at the tariffs. The U.S. metals industry has complained that the measures were no longer strong enough to keep steel mills and aluminum smelters afloat.
Kevin Dempsey, the president of the American Iron and Steel Institute, an industry group, said that the tariffs had been “very effective” compared with previous one-off trade actions that had only targeted specific countries or specific products.
“Things would be, without those tariffs, much worse for the industry,” Mr. Dempsey said.
But because steel and aluminum are used to make so many other products, raising the price of the metal will have ripple effects throughout the U.S. economy. By increasing costs of basic inputs for many companies, the tariffs could harm manufacturers who ultimately employ far more Americans than steel mills and aluminum smelters do, potentially causing Mr. Trump’s plans to bolster U.S. manufacturing to backfire.
An economic analysis published by the U.S. International Trade Commission, an independent, bipartisan agency, suggested that the costs to the U.S. economy from Mr. Trump’s first tranche of metal tariffs outweighed the gains.
The study found that the metal tariffs levied in 2018 encouraged buyers of steel and aluminum to purchase more from U.S. sources, led to higher domestic prices for metals and expanded U.S. steel production by about 2 percent between 2018 and 2021, the years the report studied.
But the analysis also found that the tariffs raised production costs for firms making automobiles, tools and industrial machinery, shrinking production in those and other downstream industries by about $3.48 billion in 2021 as a result. The steel and aluminum industries produced only $2.25 billion more in metals that year because of the levies.
In an effort to mitigate those harmful consequences, the Trump administration has expanded its steel and aluminum tariffs this time to include various downstream goods, or “derivative products,” made with steel and aluminum, such as tractor parts, metal furniture and hinges.
Chad Bown, a senior fellow at the Peterson Institute for International Economics, a research organization, said that move was an “implicit acknowledgment” that some industries were suffering because of Mr. Trump’s previous tariffs.
He said that the tariffs created a “cycle of cascading protectionism” in which more industries would ask for government safeguards, and that it “may be difficult to stop” once it gets going.
“Where does it end?” Mr. Bown asked.
The prospect of higher costs has also encouraged other U.S. industries, like automakers, to lobby for tariffs on their foreign competitors to protect their businesses. Mr. Trump has said he plans to levy a tariff on foreign cars on April 2.
For automakers, the metal tariffs threaten to raise costs when prices of new cars and trucks are already near record highs. The average price of a new vehicle in January was more than $48,000, according to Edmunds, a market research group.
“Affordability is already a major concern for American car shoppers amid elevated prices and interest rates,” said Jessica Caldwell, head of insights at Edmunds.
Robert Budway, the president of the Can Manufacturers Institute, a trade group that represents companies making steel and aluminum cans for food, soda, beer and paint, said that tariffs would result in higher packing costs, which would ultimately be passed to American consumers.
Food packagers were relying more on imported metals, and simply paying more for them, Mr. Budway said. According to figures from the institute, the cost of a steel can had increased 53 percent from 2019 to 2024, after Mr. Trump first imposed his tariffs.
“It just makes the price higher,” Mr. Budway said.
The measures also seem likely to invite retaliation from foreign countries, rebounding on U.S. exporters.
Canadian officials have said they plan to retaliate, adding on to the 25 percent tariff their government put on $30 billion of American goods this month in response to Mr. Trump’s levies.
“The government of Canada has been clear on this issue since the beginning,” said Gabriel Brunet, a spokesman for the finance minister, Dominic LeBlanc, who is leading Canada’s trade response. “Should the United States move forward” with tariffs on metals or other fees, he said on Tuesday, “we will be ready to respond firmly and proportionately.”
Britain’s trade secretary, Jonathan Reynolds, called the tariffs “disappointing.” The country was investigating steps to protect local producers and negotiating an agreement with the United States to eliminate additional measures, he said on Wednesday. Australia would not impose reciprocal tariffs, Prime Minister Anthony Albanese said, because it would push up prices for Australian consumers.
The European Union had made it clear that it would hit back against the tariffs, which it has called “economically counterproductive,” and put forth a two-part response.
Officials will allow a suspended set of tariffs to take hold in full force on April 1, affecting everything from boats to bourbon. They are also launching a process to finalize which other goods — including farm and industrial products — to hit with higher tariffs.
The European Union’s goal is to hit the United States as hard as it is hitting Europe’s economy, in hopes of drawing America to the negotiating table.
“It is not in our common interest to burden our economies with tariffs,” Ursula von der Leyen, the president of the European Commission, said in a statement.
But making a deal has been tough. Maros Sefcovic, the trade commissioner for the European Union, said during a news briefing Monday that he had traveled to the United States last month “seeking constructive dialogue.”
“In the end, as it is said, one hand cannot clap,” he said. “The U.S. administration does not seem to be engaging to make a deal.”
European officials have also struggled to get their American counterparts on the phone.
Ms. von der Leyen has not spoken individually with Mr. Trump since his inauguration. Asked when she might do so during a news conference on Sunday, she said that “we will have a personal meeting when the time is right.”
Neal E. Boudette contributed reporting.
President Trump made a lot of promises on the campaign trail last year. Investors and business leaders enthusiastically cheered some, like lower taxes and relaxed regulation, and expressed wariness about others, like tariffs and reduced immigration.
But when Mr. Trump won the election, there was little sign of that ambivalence: Stock prices soared, as did measures of business optimism.
Investors at the time offered a simple explanation: They believed Mr. Trump, backed by a Republican-controlled Congress, would follow through on the parts of his agenda that they liked and scale back the more disruptive policies like tariffs if financial markets started to get spooked.
It is increasingly clear they were wrong.
In his first weeks in office, Mr. Trump has made tariffs the central focus of his economic policy, promising, and at times imposing, steep penalties on allies as well as adversaries. He has threatened to curb subsidies that businesses had come to rely on. And he has empowered Elon Musk’s efforts to slash the federal bureaucracy, potentially putting tens of thousands of federal workers out of jobs and cutting off billions of dollars in government grants and contracts.
Most surprising, at least to the optimists on Wall Street: Mr. Trump has so far been undeterred by signs of cracks in the economy or by plunging stock prices.
“The idea that the administration is going to be held back by a self-imposed market constraint should be discounted,” said Joe Brusuelas, chief economist at the accounting firm RSM.
Sure enough, on Tuesday, as financial markets seemed to be settling down after days of steep losses, Mr. Trump hit them with another shock, escalating his trade war with Canada. Major stock indexes immediately fell sharply on the news, with the S&P 500 ending the day down almost 1 percent. Mr. Trump ultimately reversed his decision after Canada said it would remove an electricity surcharge that had prompted the president’s threats.
Far from being deterred by warnings that his policies are creating economic damage, Mr. Trump in recent days has embraced it, telling a Fox News interviewer on Sunday that the economic turmoil reflected a necessary “period of transition” and refusing to rule out a recession.
Asked about whipsawing financial markets on Tuesday, Mr. Trump told reporters: “Markets are going to go up and they’re going to go down but, you know what, we have to rebuild our country.”
That followed comments from Karoline Leavitt, the White House press secretary, who said that the stock market reaction was a “snapshot of a moment in time.”
“Look, the president is unwavering in his commitment to restore American manufacturing and global dominance and I think he doubled down on that with his new statement” on Canada’s tariffs, she said.
Other members of his administration have echoed that message, describing tariff-induced price increases and cuts in government spending as a harsh but necessary medicine to restore the economy to health.
Scott Bessent, the Treasury secretary, told CNBC last week that the economy needed a “detox period” after becoming “addicted to this government spending.”
Most economists, however, dismiss the idea that the economy was in need of such shock therapy, or that Mr. Trump’s policies would be helpful if it did.
“It’s an effort to give the pain and the uncertainty that we’re going through at the moment some broader meaning and encourage us that we’re going to get to a better place,” said Nathan Sheets, a former Treasury official who is now global chief economist at Citigroup, of the administration’s new message. “But the bigger question is, are we really going to get to a better place?”
The answer, according to Mr. Sheets and others, is “no.” Tariffs are likely to drive up prices and slow down growth. Tighter immigration policy could do the same. Government layoffs could drive up unemployment, while cuts to federal investments in research and development could leave the U.S. economy less productive in the long term.
“It seems we are going to create pain, see what doesn’t heal, and then treat the injury,” said Tara Sinclair, an economist at George Washington University.
A ‘shock factor’ for businesses
Economists disagree about how much damage the new administration’s policies have done. The economy entered the year with significant momentum, and most forecasters believe there is enough of a cushion to avoid a recession, if Mr. Trump doesn’t further escalate his trade wars.
But the uncertainty of the past six weeks has been enough to cloud what had until recently looked like a sunny economic outlook. In surveys, consumers say they have become less optimistic about their finances and more worried about higher prices. Businesses, too, have become less confident and are delaying investment decisions.
“There is a shock factor in the business community that we are seeing right now,” said Thomas Simons, chief U.S. economist at the investment banking firm Jefferies. Businesses are slowing hiring and putting off buying products and equipment, Mr. Simons said. “It certainly seems like right now, you’d want to take a breath and let some of the dust settle before you make that decision.”
Cautioning short-term pain
The idea that Americans must endure short-term pain for long-term gain is not entirely new for Mr. Trump. In his first term, he praised farmers who were the collateral damage in his trade war with China, describing them as “patriots” making a sacrifice for the greater good.
But Mr. Trump, in his first term, also tried to offset that damage with billions of dollars in aid for farmers.
This time, the costs associated with Mr. Trump’s policies are potentially much broader, and they are coming in a much different economic context, when Americans have been scarred by years of high prices and elevated borrowing costs.
Consumer surveys show that Americans have begun to anticipate higher prices as a result of tariffs. That could pose a political problem for Mr. Trump, and also an economic one: If consumers come to expect faster inflation, it could make it more difficult for policymakers at the Federal Reserve to counteract a slowdown in the economy through lower interest rates.
Some Fed officials are expressing concern that the combination of slowing growth and stubborn price pressures could put the central bank in a bind.
“That’s a stagflationary impulse,” Austan D. Goolsbee, president of the Federal Reserve Bank of Chicago, said in an interview last week. “There isn’t a generic answer to what you’re supposed to do.”
Mr. Bessent and other members of the Trump administration have argued that the economy they inherited was not as strong as it appeared. In a speech in Washington last month, he argued that growth was being effectively propped up by government spending, and that the economy needed to be weaned off that support.
“The previous administration’s overreliance on excessive government spending and overbearing regulation left us with an economy that may have exhibited some reasonable metrics but ultimately was brittle underneath, and heading for an unstable equilibrium” he said, according to Reuters.
But Jared Bernstein, who served as chairman of former President Joseph R. Biden Jr.’s Council of Economic Advisers, said Mr. Bessent and other members of the Trump administration were simply looking for someone to blame now that economic data has begun to worsen.
“They inherited an economy that was and remains the strongest among all the advanced economies, and they squandered their inheritance in a mere six weeks with policy chaos that’s tanking business and consumer confidence along with markets,” Mr. Bernstein said.
Government statistics support the notion that the economy was solid when Mr. Trump took office, even excluding the role of government. Government spending played a key role in propping up the economy during the Covid pandemic, both at the end of Mr. Trump’s first term and early in the Biden administration. But it fell later in Mr. Biden’s term, while private-sector hiring, investment and spending remained healthy.
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The United States buys more steel from Canada than from any other country, and those imports will become much more expensive under tariffs President Trump intends to impose this week.
That’s good news to Stephen Capone, president of Capone Iron Corporation of Rowley, Mass., which makes steel stairs, handrails, gratings and other products and has around 100 employees. For too long, he said, Canadian competitors have been flooding the New England market with cheap steel products, preventing his and other local companies from winning business.
“No matter how low we bid, they can underbid us on any job,” Mr. Capone said. “They’re decimating our market.”
Many companies oppose Mr. Trump’s tariffs, fearing that they will push up costs and provoke retaliation against their products by other countries. Ford Motor’s chief executive, Jim Farley, said last month that tariffs could “blow a hole” in the U.S. auto industry, and retailers have warned that they will lead to higher prices for consumers.
But there are deep pockets of support for his trade policies in the business world, particularly among executives who say their industries have been harmed by unfair trade.
In particular, the leaders of American steel and aluminum companies have long contended that foreign rivals undercut them because those rivals benefit from subsidies and other government support. And they say that tariffs, when imposed without loopholes, have been effective at spurring more investment in the United States.
Mr. Trump on Thursday suspended broad tariffs that he had imposed two days earlier on imports from Canada and Mexico. But tariffs on steel and aluminum products, authorized under a national security provision called Section 232 of the Trade Expansion Act, are scheduled to take effect on Wednesday.
“President Trump was elected with a resounding mandate to level the playing field for American manufacturers and workers using tariffs, and he is committed to delivering on that mandate — including for our keystone steel and aluminum industries,” Kush Desai, a White House spokesman, said in a statement.
The tariffs apply a 25 percent levy on steel and aluminum imports from Canada, Mexico and other countries.
In his first administration, Mr. Trump imposed Section 232 tariffs on steel and aluminum, but Mexico and Canada gained exemptions from them when a new trade agreement among those countries and the United States took effect in 2020.
Jesse Gary, chief executive of Century Aluminum, an American aluminum producer, supported the aluminum tariffs during Mr. Trump’s first term, but said the exemptions had made them less effective, and was glad to see them being reimposed.
“The new tariffs will close those loopholes back up and enable us to begin investing again, and bring on more production here in the U.S.,” he said.
Philip Bell, president of the Steel Manufacturers Association, an American trade group, said there had been a surge of steel imports in recent years. He said Mexican companies were importing cheap steel from China, making slight alterations and exporting it to the United States as if it were produced in Mexico.
The Biden administration moved last year to stop the practice by applying a 25 percent tariff on Mexican steel that was melted or poured outside North America before being turned into a finished product. Mr. Trump’s tariffs go further by applying to all steel from Mexico.
“The president is sending a clear message to our trading partners that it’s time to get serious about their trading relationships with the United States,” Mr. Bell said.
Canadian steel companies reject accusations that they are breaking trade rules.
“Our members are deeply committed to a North American steel market that is protected from unfair trade practices, and we do not contribute to global overcapacity with our production levels remaining below Canada’s steel demand,” Catherine Cobden, president of the Canadian Steel Producers Association, a trade group, said in a statement.
While the tariffs could enable U.S. steel and aluminum manufacturers to take a bigger share of the domestic market, the question is whether they make the large investments needed to expand capacity.
Steel companies did so after the tariffs of the first Trump administration. Timna Tanners, a managing director at Wolfe Research covering metals companies, said U.S. companies could add enough capacity to replace imported steel in many markets. But, she added, fear of a creating a glut might temper their plans.
“The mills don’t seem to want to run that hard because they also think that could pressure prices lower, and they’d rather enjoy higher prices,” Ms. Tanners said.
Last year, imports of finished steel accounted for about 23 percent of the market, according to the American Iron and Steel Institute. The United States is far more dependent on imports of aluminum.
American smelters used to dominate the production of primary aluminum — aluminum derived from raw materials rather than from recycling — but today China makes far more than any other country. The Commerce Department found that the United States imported 90 percent of its primary aluminum in 2016.
The Economic Policy Institute, a left-leaning think tank, credited the Section 232 tariffs of Mr. Trump’s first administration for somewhat reviving the primary aluminum industry.
Century, the largest producer of primary aluminum in the United States, plans to build a new aluminum smelting plant, the first in the United States in 45 years. It aims to do so with a grant of up to $500 million that was awarded by the Biden administration using funds from the Inflation Reduction Act and the infrastructure investment act. Century must still obtain significant additional financing to build the plant. And the Trump administration is reviewing grants made under the Inflation Reduction Act.
Asked whether the review puts the plans at risk, Mr. Gary said, “We think the new project altogether fits exactly the sort of investment that this administration wants to do,” adding that building the plant could create 5,500 jobs and that operating it would require 1,000 full-time workers.
Still, the U.S. aluminum industry is divided on Mr. Trump’s latest tariffs, in large part because American companies have plants in Canada that would be hit by the levies. Charles Johnson, the president of the Aluminum Association, a trade group, said on LinkedIn last month that, while he supported some aspects of the Section 232 tariffs, the United States needed “a reliable source of metal from Canada to support the jobs and investments happening today.”
If tariffs push up the prices of steel and aluminum, companies using the metals in their products may pass the extra costs on to consumers — or find substitutes.
Unions also support Mr. Trump’s tariffs but have at times objected to how he has imposed them. The United Steelworkers union has criticized his targeting of Canada, where it has over 225,000 members, saying the steel trade with Canada is fair.
“We call on the president, moving forward, to differentiate between trade cheaters and trusted allies that reliably work with us to advance our national and economic security,” David McCall, international president of the United Steelworkers, said in a statement.
Mr. Capone, the Massachusetts steel executive, wants Mr. Trump’s steel tariffs to be even tougher. They exempt steel imports from Canada from tariffs if the Canadian company is fabricating steel made in American mills. He said much more labor was involved in fabricating the steel — turning it into products like stairs and grating — than in manufacturing it, and said that should be reflected in the tariffs.
“The 232 tariffs favor the mills, not the fabricators,” Mr. Capone said.
