US allies to hit back over metals tariffs

Washington: The US says it will impose tariffs on aluminium and steel imports from Canada, Mexico and the European Union, reigniting investor fears of a global trade war as Washington's allies took steps to retaliate against American goods.

The move, announced by US Commerce Secretary Wilbur Ross in a telephone briefing on Thursday, ended months of uncertainty about potential tariff exemptions and suggested a hardening of the Trump administration's approach to trade negotiations.

Steel coils are stored at the Thyssenkrupp steel factory in Duisburg, Germany.

A 25 per cent tariff on steel imports and 10 per cent tariff on aluminium imports will be imposed on the EU, Canada and Mexico starting at midnight local time, Ross told reporters.

"We look forward to continued negotiations, both with Canada and Mexico on the one hand, and with the European Commission on the other hand, because there are other issues that we also need to get resolved," he said.

Canada and Mexico, embroiled in talks with the US to modernise the North American Free Trade Agreement, responded swiftly.

Canada, the largest supplier of steel to the US, will impose retaliatory tariffs covering $C16.6 billion in imports from the US, including whiskey, orange juice, steel, aluminium and other products, Canadian Foreign Minister Chrystia Freeland said.

A steel worker watches the hot metal at the Thyssenkrupp steel factory in Duisburg, Germany.

Ottawa will also challenge the tariffs under NAFTA and World Trade Organisation rules, she said.

Mexico announced what it described as "equivalent" measures on a wide range of US farm and industrial products.

The measures, which target pork legs, apples, grapes and cheese as well as steel and other products, will be in place until the US government eliminates its tariffs, Mexico's economy ministry said.

The EU has threatened tariffs on Harley-Davidson motorcycles and bourbon, measures aimed at the political bases of US Republican legislators.

Canadian Prime Minister Justin Trudeau: “These tariffs are totally unacceptable.”

"This (US) measure brings the danger of a spiral of escalation, which in the end harms everyone," German government spokesman Steffen Seibert said in a statement, adding that Germany would continue to push for free trade and open markets.

EU members have given broad support to a European Commission plan to set duties on  €2.8 billion  ($A4.3.billion) of US exports if Washington ends the tariff exemption. EU exports potentially subject to US duties are worth €6.4 billion.

"It's entirely up to US authorities whether they want to enter into a trade conflict with their biggest partner, Europe," France's Finance Minister Bruno Le Maire said after meeting with Ross on Thursday.

US President Donald Trump announced the tariffs in March as part of an effort to protect US industry and workers from what he described as unfair international competition, a key theme of his "America First" agenda.

Temporary exemptions were granted to a number of nations and permanent ones to several countries including Australia, Argentina and South Korea. US trading partners had demanded that the exemptions be extended or made permanent.

The tariffs are aimed at allowing the US steel and aluminium industries to increase their capacity utilisation rates above 80 per cent for the first time in years.

The US administration also launched a national security investigation last week into car and truck imports, using the same 1962 law it has applied to curb incoming steel and aluminium.

Reuters

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