America’s trade war has officially gone global

President Trump’s 25% tariff on all global steel and aluminum imports went into effect yesterday, in a move that prompted immediate trade retaliation by Canada and the EU. Or in other words, the global trade war is going pedal to the metal.

In response to the move:

• Canada imposed reciprocal 25% tariffs on ~$21 billion worth of US steel, aluminum, and other goods like computers, sports equipment, and cast iron products.
• The EU announced future counter-tariffs on ~$24.5 billion worth of well-known American products, including Kentucky bourbon, Harley-Davidson motorcycles, peanut butter, and blue jeans.

The impact: America’s auto industry in particular is expected to feel the effects of Trump’s global tariffs on steel and aluminum, which together account for 50+% of all materials that go into cars. The new duties – paid by US businesses importing the goods – are projected to raise average manufacturing costs by ~$400/vehicle, with the majority passed on to American consumers.

• Home appliances, medical devices, cans, machinery, and infrastructure are other commonly used products that could see price increases following the new US tariffs.

Tariffs could keep escalating – or potentially be reversed. Trump yesterday pledged to impose additional tariffs on the EU if the bloc follows through with its plan to enact counter-tariffs (which begins April 1). Meanwhile, European Commission President Ursula von der Leyen says the EU remains open to making a deal with the US, and would reverse its retaliatory tariffs if such an agreement were reached.

📅👀 Looking further ahead…Trump’s recent exemptions from tariffs on Canada and Mexico are set to expire April 2 – the same date Trump has promised to impose new reciprocal tariffs, which involve responding to any duties on US exports by enacting identical tariffs on the other country (involving the same products and same rates).