Updated at 8.45pm

CANADA HAS HIT back at steep US tariffs on aluminium and steel today, announcing retaliatory duties on American goods worth $16.6 billion (€10.9 billion).

The US has said it will impose stiff tariffs on steel and aluminium imports from the European Union, Canada, Mexico, reviving fears of a trade war with angry allies and trading partners.

The announcement by Commerce Secretary Wilbur Ross immediately drew retaliatory action by Mexico, Canada and threats of the same by the EU, while Germany warned against “spirals of escalation that hurt everyone”.

“Trade wars don’t have any winners,” said German Foreign Minister Heiko Maas.

The US action, which takes effect at midnight (4am Irish time), cast a long shadow over a meeting of finance ministers from the Group of Seven top economies, which opened in Canada.

International Monetary Fund chief Christine Lagarde, warned of an erosion of trust.

“It’s going to distort and damage and disrupt supply chains which have been established now for decades,” she said.

Ross, however, said inconclusive talks with the EU had failed to convince Washington that it should continue exempting the trading block from the tariffs – 25% duties on steel and 10% on aluminium – that it imposed in March.

Washington also is removing exemptions for Mexico and Canada because, he said, negotiations to revise the North American Free Trade Agreement are “taking longer than we had hoped” and there is no “precise date” for concluding them.

A presidential proclamation confirmed the action.

The White House maintained that since the tariffs were first imposed in March, they have had “major, positive effects on steel and aluminium workers and jobs and will continue to do so long into the future”.

It said the administration’s actions “underscore its commitment to good-faith negotiations with our allies to enhance our national security while supporting American workers”.

But instead of dialogue, the announcement immediately set off threats of matching sanctions from Mexico, Canada and the EU.

Not a gunfight

Canada announced $16.6 billion (€10.9 billion) in retaliatory duties on US goods.

At a news conference, Prime Minister Justin Trudeau said the US tariffs announced earlier were “totally unacceptable.”

“These tariffs are an affront to the long-standing security partnership between Canada and the United States, and in particular, an affront to the thousands of Canadians who have fought and died alongside their American brothers in arms,” he said, noting the US national security justification for its measures.

EU chief Jean-Claude Juncker said the 28-nation bloc “will announce in the next coming hours counter-balancing measures” in response to the US action.

Brussels previously threatened to slap tariffs on US products including bourbon, motorcycles and blue jeans.

Mexico said it will impose retaliatory duties on a variety of US goods, including steel and a host of agricultural goods, including pork, apples, blueberries and various cheeses.

“World trade is not a gunfight at the OK Corral,” French Economy Minister Bruno Le Maire warned, referring to a 1957 western movie.

“It’s not everyone attacking the other and we see who remains standing at the end,” he said, declaring that the stiff US duties were “unjustified, unjustifiable and dangerous”.

German Chancellor Angela Merkel said the EU would respond in a “firm and united” manner to the tariffs.

Meanwhile, South Korea negotiated a steel quota, while Argentina, Australia and Brazil have arranged for “limitations on the volume they can ship to the US in lieu of tariffs,” Ross said.

Talks can continue

Despite weeks of talks with his EU counterparts, Ross said the US was not willing to meet the EU demand to be “exempted permanently and unconditionally from these tariffs”.

“We had discussions with the European Commission and while we made some progress, they also did not get to the point where it was warranted either to continue the temporary exemption or have a permanent exemption,” Ross said.

Ross downplayed the threats of retaliation, and said talks can continue even amid the dispute to try to find a solution.

And he said Trump has the authority to alter the tariffs or impose quotas or “do anything he wishes at any point” – allowing “potential flexibility” to resolve the issue.

Trump imposed the steel and aluminium tariffs using a national security justification, which Ross said encompasses a broad array of economic issues – a premise derided by US allies.

Ross said Trump was living up to his campaign promises.

“The overwhelming objective is to level the playing field,” Ross said, adding that US goals include getting rid of trade barriers, protecting intellectual property and stopping forced technology transfers.

Protecting technology is the key issue in the US trade dispute with China, which the White House said will face 25% tariffs on $50 billion (€42.7 billion) in goods.

Ross said he plans to travel to Beijing Friday for further talks aimed at finding a solution to the trade friction.

The administration had said the China tariffs were on hold, but then reversed course this week and announced it was planning to go ahead with them after all.

Republican outcry

The US action prompted an outcry from Trump’s own Republican party, although metal industry groups expressed support.

“When it comes to unfairly traded steel and aluminium, Mexico, Canada, and Europe are not the problem – China is,” said Kevin Brady, chairman of the House Ways and Means Committee.

Republican Senator Ben Sasse was more blunt: “This is dumb.”
- © AFP, 2018