Trump threatens further tariffs as EU, Canada retaliate for those already in place

WASHINGTON, March 12 (Reuters): Donald Trump threatened on Wednesday to escalate a global trade war with further tariffs on European Union goods, as major US trading partners said they would retaliate for trade barriers already erected by the US president.

Just hours after Trump’s 25 percent duties on all US steel and aluminum imports took effect, Trump said he would impose additional penalties if the EU follows through with its plan to enact counter tariffs on some US goods next month. “Whatever they charge us, we’re charging them,” Trump told reporters at the White House.

Trump’s hyper-focus on tariffs has rattled investor, consumer and business confidence and raised recession fears. He also has frayed relations with Canada, a close ally and major trading partner, by repeatedly threatening to annex the neighbouring country.

Canada, the biggest foreign supplier of steel and aluminum to the United States, announced 25 percent retaliatory tariffs on those metals along with computers, sports equipment and other products worth $20 billion in total. Canada has already imposed tariffs worth a similar amount on US goods in response to broader tariffs by Trump.

“We will not stand idly by while our iconic steel and aluminum industries are being unfairly targeted,” Canada’s Finance Minister Dominic LeBlanc said.

Canada’s central bank also cut interest rates to prepare for economic disruption.

Trump’s action to bulk up protections for American steel and aluminum producers restores effective tariffs of 25 percent on all imports and extends the duties to hundreds of downstream products, from nuts and bolts to bulldozer blades and soda cans.

EU says Trump tariffs will trigger firm countermeasures

US Commerce Secretary Howard Lutnick said Trump would impose trade protections on copper as well.

A Reuters/Ipsos poll found 57 percent of Americans think Trump is being too erratic in his effort to shake up the U.S. economy, and 70 percent expect the tariffs will make purchases more expensive.

EU LESS EXPOSED

The 27 countries of the European Union are less exposed, as only a “small fraction” of targeted products are exported to the United States, according to Germany’s Kiel Institute.

The EU’s counter-measures would target up to $28 billion worth of US goods like dental floss, diamonds, bathrobes and bourbon – which likewise account for a small portion of the giant EU-US commercial relationship. Still, the liquor industry warned they would be “devastating” on its sector.

Commission President Ursula von der Leyen said the bloc will resume talks with US officials.

“It is not in our common interest to burden our economies with such tariffs,” she said.

At the White House, Trump said he would “of course” respond with further tariffs if the EU followed through on its plan. With Irish Prime Minister Micheal Martin at his side, Trump criticized the EU member country for luring away US pharmaceutical companies.

In remarks delivered later at a White House ceremony, Martin touted the history of free trade between the two nations.

“Let us continue to build on that foundation,” he said, with an impassive Trump looking on. “Let us continue to work together to make sure that we maintain that mutually beneficial, two-way economic relationship that has allowed innovation and creativity and prosperity to thrive.”

China’s foreign ministry said Beijing would safeguard its interests, while Japan’s Chief Cabinet Secretary Yoshimasa Hayashi said the move could have a major impact on US-Japan economic ties.

Close US allies Britain and Australia criticized the blanket tariffs, but ruled out immediate tit-for-tat duties.

Brazil, the No. 2 provider of steel to the United States, said it would not immediately retaliate.