Higher US metals tariffs kick in as deadline for 'best offers' arrives

Khaleej Times

5 days ago

Washington doubled its tariffs on steel and aluminium imports on Wednesday, the same day President Donald Trump's administration expects trading partners to make "best offers" to avoid other punishing import levies from taking effect in early July.
Maros Sefcovic, the trade negotiator for the European Union, said he "had a productive and constructive discussion" with U.S. Trade Representative Jamieson Greer in Paris on Wednesday morning.
"We're advancing in the right direction at pace - and staying in close contact to maintain the momentum," Sefcovic said on X, without giving any detail on the talks. He had been due to make the case for cutting or eliminating threatened tariffs on European imports.
Late on Tuesday, Trump signed an executive proclamation that activates from Wednesday a hike in the tariffs on imported steel and aluminium to 50% from the 25% rate introduced in March.
"We started at 25 and then after studying the data more, realized that it was a big help, but more help is needed. And so that is why the 50 is starting tomorrow," White House economic adviser Kevin Hassett told a steel industry conference in Washington on Tuesday. The increase came into effect at 12:01 a.m. (0401 GMT).
The increase applies to all trading partners except Britain, the only country so far that has struck a preliminary trade agreement with the U.S. during a 90-day pause on a wider array of Trump tariffs. The rate for steel and aluminium imports from the UK - which does not rank among the top exporters of either metal to the U.S. - will remain at 25% until at least July 9.
The United States imports about a quarter of all its steel, and Census Bureau data shows the increased levies will hit the closest U.S. trading partners - Canada and Mexico - especially hard.
Canada will be even more exposed to the aluminium levies since it exports to the U.S. roughly twice as much as the rest of the top 10 exporters' volumes combined. The U.S. gets about half of its aluminum from foreign sources.
Prime Minister Mark Carney's office said Canada was "engaged in intensive and live negotiations to have these and other tariffs removed."
Mexico's Economy Minister Marcelo Ebrard reiterated that the tariffs were unsustainable and unfair, especially given that Mexico imports more steel from the U.S. than it exports there.
The increase in the levies jolted the market for both metals this week, especially for aluminium, which has seen price premiums more than double this year. With little capacity to increase domestic production, U.S. import volumes are likely to be unaffected unless the price increases undercut demand.
'Best offer' due date
Wednesday is also when the White House would like trading partners to propose deals that might help them avoid Trump's hefty "reciprocal" tariffs on imports across the board from taking effect in five weeks.
U.S. officials have been in talks with a number of countries since Trump announced a pause on those tariffs on April 9, but so far only the UK deal has come to fruition. Even that pact is more of a preliminary framework for more talks.
Reuters reported on Monday that Washington was asking countries to list their best proposals in a number of key areas, including tariff and quota offers for U.S. products and plans to remedy any non-tariff barriers.
In turn, the letter promises answers "within days" with an indication of a "landing zone," including what tariff rates countries can expect after the 90-day pause ends on July 8.
At issue for most trading partners is whether they retain the current baseline rate of 10% on most exports to the U.S. after that date, or something possibly much higher.
Havoc for businesses
Separately, alarm over China's hold on the critical minerals market is growing as global automakers joined U.S. counterparts to complain that its restrictions on exports of rare earth alloys, mixtures and magnets could cause production delays.
China's decision in April to suspend exports of a wide range of rare earths and related magnets has upended the supply chains central to automakers, aerospace manufacturers, semiconductor companies and military contractors globally.
Uncertainty around U.S. trade policy is creating havoc for businesses around the world. On Wednesday, French spirits group Remy Cointreau abandoned its 2030 sales growth ambitions, saying tariffs, slow U.S. sales and high uncertainty could derail its plans for this financial year and beyond.
Austrian speciality steelmaker Voestalpine also warned that tariffs were likely to dent its earnings, while German engineering lobby group VDMA blamed uncertainty caused by Trump's tariffs for a 6% drop in orders its members reported in May.
Meadow, a Swedish business which reuses aluminium cans to make packaging for consumer goods, said the company was looking for ways to protect against future shocks.
"One way to do that is to move supply chains closer to home so as to become less reliant on strategically compromised countries for supply," said Meadow's head of sustainability Ross Murdoch.