Mexico threatens retaliation as US doubles metal tariffs, EU and others race to avoid further levies

CNA

a day ago

WASHINGTON: Mexico has threatened to impose retaliatory tariffs after the United States doubled its import duties on steel and aluminium, deepening a global trade dispute that has disrupted markets and strained diplomatic ties.
US President Donald Trump's decision to increase the levies to 50 per cent took effect at midnight on Wednesday (Jun 4), applying to all countries except the United Kingdom, which secured a temporary exemption via a preliminary trade agreement.
Mexico's Economic Minister Marcelo Ebrard said the hike was 'unsustainable and unfair,' and confirmed that countermeasures were being prepared. 'We cannot accept this in silence. Our response will be firm but calibrated,' he said at a press conference in Mexico City.
The Mexican Chamber of Commerce also urged immediate government action, while industry leaders warned of rising production costs and job losses in the country's manufacturing sector.
EU, US cite progress in tariff talks
Meanwhile, the United States and European Union reported progress during high-level trade discussions in Paris on the same day the new tariffs were enacted.
EU trade negotiator Maros Sefcovic and US Trade Representative Jamieson Greer said the meeting was constructive, with technical-level talks continuing in Washington and further negotiations planned.
'What makes me optimistic is I see the progress, the discussions are now very concrete,' said Sefcovic.
Greer echoed the sentiment, noting a 'willingness by the EU to work with us to find a concrete way forward to achieve reciprocal trade.'
Markets react to metals hike
Markets responded with volatility to the hike in tariffs, which doubled the previous 25 per cent duty rate introduced in March. Canada and Mexico, the US's largest trading partners for steel, are among those hit hardest.
The new tariffs also jolt the aluminium sector, with Canada being the top exporter of the metal to the US. Prime Minister Mark Carney said Canada was engaged in 'intensive' talks to reverse the levies, which Ottawa considers illegal. Labour union Unifor called for reciprocal tariffs on US metal imports.
The American Automotive Policy Council warned the measures would increase vehicle production costs and harm US competitiveness. Meanwhile, the Congressional Budget Office forecast a negative impact on US economic output.
Broader fallout and 'best offer' deadline
Wednesday also marked the deadline set by the White House for countries to submit proposals aimed at averting additional reciprocal tariffs expected to take effect on July 8.
Only the UK has reached a provisional agreement so far, with talks continuing with other trading partners. The US has asked for concessions on both tariff rates and non-tariff barriers in exchange for exemptions.
Minerals and manufacturing in flux
Separately, supply chain concerns are growing over China's restrictions on rare earth exports. European automakers have reported production disruptions, while German carmaker BMW noted delays in its parts supply due to shortages of essential minerals.
Global uncertainty over tariffs has already affected firms across sectors, with French spirits group Remy Cointreau slashing its long-term sales goals and German manufacturers citing reduced orders.