WASHINGTON — The United States will impose wide-ranging tariffs on steel and aluminum, U.S. President Donald Trump declared Thursday, prompting allies to fume, stock markets to fall and analysts to fret about long-term consequences that could rattle the international trading system.
After months of suspense, the president released only the barest of details about his plans: a 25 per cent tariff on steel and a 10 per cent tariff on aluminum, numbers that in both cases were higher than had been expected.
“We’ll be signing it next week,” Trump told a gathering of industry leaders. “And you’ll have protection for a long time.”
Several American allies have already said they would retaliate, including the European Union. News of the tariffs sent stock markets plunging, along with the Canadian dollar. One major unknown lingers: whether Canada — the No. 1 supplier of both steel and aluminum to the U.S. — is on the hit list.
Trump was known to be weighing a variety of options — massive tariffs on just a few countries believed to ship dumped Chinese steel, a quota limiting imports or a tariff on the entire world, including Canada, around 24 per cent. The penalty he announced Thursday sounded most like the latter.
Foreign Affairs Minister Chrystia Freeland described the idea of tariffs on Canada as “absolutely unacceptable.”
“Should restrictions be imposed on Canadian … products, Canada will take responsive measures to defend its trade interests and workers.”
The drama started with the Trump administration unsheathing a weapon rarely used in the trade world: a so-called national security exception. American law allows the president to order tariffs if it’s declared a matter of national security.
Trump technically has until next month to make a decision. But he had already made clear he was itching to pull the trigger on tariffs. U.S. news reports described a vigorous battle within the White House between the free-traders and the protectionists who share the same impulses as the president.
The issue appeared to split the president from prominent Republicans. He drew condemnation not only from the establishment wing of his party, including powerful senator Orrin Hatch, but also from anti-establishment conservatives, like Mark Meadows, who leads the right-wing caucus on Capitol Hill.
Meadows tweeted: “Tariffs on steel and aluminum are a tax hike the American people don’t need and can’t afford.”
The Pentagon even published a letter urging him not to target allies. During consultations, witness after witness urged the government to make a special exception for Canada, given the joint auto sector, shared aluminum market and the integrated defence-industrial complex served by the metals.
Even the unions supporting tariffs have lobbied for a Canadian exemption. That includes the well-connected United Steelworkers union, which has members in both countries, and a president who is from Canada, Leo Gerard.
Gerard has been urging the administration to leave his home and native land out of it.
“To put Canada in the same boat as Mexico, or China, or India, or South Korea … doesn’t make sense,” he said in an interview.
“Canada should just be excluded — period. We have an integrated economy. And if it gets undone, America will pay a heavy price…. In every opportunity I’ve had, I’ve tried to point out to the key decision-makers that Canada is not the problem when it comes to international trade — and to do something that would sideswipe Canada would disadvantage (the U.S.).”
Last year, Canada exported about C$9.3 billion of aluminum and C$5.5 billion of steel to the U.S., where Canadian steel represented just over 15 per cent of overall imports. Indeed, almost 90 per cent of Canada’s exports went directly south.
But the issue has significance well beyond North America.
Several trade experts have warned that such loose use of a national-security exemption invites others to do the same, and could lead to a domino effect of reprisals. Mexico and Europe are already threatening counter-tariffs.
“Trump’s national security protectionism will open Pandora’s box,” blared the headline on a Forbes piece by trade analyst Dan Ikenson.
Added Edward Alden of the U.S. Council on Foreign Relations, on Twitter: “This is the most consequential protectionist action by the U.S. since (Richard) Nixon’s 10 per cent across-the-board tariffs in 1971. And those didn’t last very long.”The Canadian government and its business allies intend to keep lobbying hard for an exemption. In Washington, some hoped Trump might get cold feet — as he’s done on specific policies before, like immigration reform.
Getting the attention of Americans might be a challenge, however.
Word of the tariffs was being partially lost Thursday in an avalanche of American political news. The news network MSNBC ran a graphic illustrating all the big stories it was trying to keep track of — from the Russia probe to alleged conflicts-of-interest at the White House; from gun legislation to ongoing power struggles within the administration.