US and EU introduce tariffs this week

Background

President Trump suspended 25% tariffs on goods from Canada and Mexico under USMCA rules on 6 March. New steel and aluminium tariffs imposed. EU announced retaliatory measures.

The week in summary 

On Thursday, 6 March, US President Donald Trump suspended the 25% tariffs he had recently imposed on most goods from Canada and Mexico that meet the USMCA (US-Mexico-Canada Free Trade Agreement) rules. This decision stems from an increasingly fluctuating trade policy that has caused market uncertainty as well as concerns about inflation and the impact on economic growth. The exemptions for Canada and Mexico are due to expire on 2 April, after which President Trump has threatened to implement reciprocal tariffs on all US trading partners. The 20% additional tariffs on China are still in place. Similarly, China’s 10-15% retaliatory tariffs on certain US imports also remain in place. 

President Trump had also announced on his Truth Social platform that he will impose an additional 25% tariff on steel and aluminium imports from Canada, bringing the total tariff to 50% and further escalating the trade battle with one of the US’s biggest trading partners. However, this plan to double tariffs was quickly rolled back by the White House on 12 March. 

US: Steel and aluminium tariffs

On Wednesday, 12 March, President Trump’s plans to re-impose sweeping 25% tariffs on steel and aluminium came into effect. These tariffs apply to a wide range of steel and aluminium products and include hundreds of downstream products, from nuts and bolts to bulldozer blades and soda cans. The hardest-hit nations by Trump's tariffs are Canada, Brazil, Mexico, the UAE and South Korea as they are the largest producers of the affected products.

EU: Retaliatory tariffs

On 12 March, the EU Commission announced countermeasures in response to the US tariffs on steel and aluminium products, which they deemed "unjustified". EU Commission President, Ursula von der Leyen said: “As the US are applying tariffs worth 28 billion dollars, we are responding with countermeasures worth €26 billion. This matches the economic scope of the US tariffs. Our countermeasures will be introduced in two steps. Starting with 1 April and fully in place as of 13 April. In the meantime, we will always remain open to negotiation.”

The EU Commission’s response is a two-step approach:

1. 1 April: The EU Commission will allow the suspension of existing 2018 and 2020 countermeasures against the US to lapse, thereby bringing the tariffs into effect from this date. This includes a 25% tariff on items such as:
   • Certain foods or foodstuffs (certain vegetables, fruit, rice etc.)
   • Various types of fruit juices
   • Whiskey, including bourbon
   • Various tobacco products
   • Cosmetic preparations
   • Men's and women's clothing (T-shirts, jeans and other garments)
   • Footwear
   • Various steel and aluminium products
   • Motorcycles
2. 13 April: In response to new US tariffs affecting more than €18 billion of EU exports, the EU Commission is putting forward a package of new countermeasures on US exports. They will come into force on 13 April, following consultation of Member States and stakeholders. These tariffs are currently under negotiation and remain undisclosed. The items potentially subject to these tariffs are detailed in a comprehensive 99-page list of commodity codes, encompassing a wide range of categories including foodstuffs, alcohol, consumer goods, plastics, textiles, wood and timber, lighting, motorcycles, white goods and household appliances, and optical fibres. The specific rates applicable to these items are yet to be determined.

Taoiseach meeting with President Trump

President Trump met with the Taoiseach Michael Martin today in the White House as part of the St. Patrick’s Day celebrations. President Trump opened up the meeting by commenting on Ireland’s use of its tax policies to attract pharmaceutical and other companies away from the United States. Separately, he reiterated his commitment to imposing reciprocal tariffs to support the revival of U.S. manufacturing.

President Trump also highlighted a significant trade imbalance between the United States expressing his desire to address this imbalance collaboratively, noting that: “There's a massive deficit that we have with Ireland and with other countries too, and we want to sort of even that out as nicely as we can, and we'll work together. But the deficit is massive.”

In addition with respect to tariffs President Trump stated the US has "been abused for a long time and we will be abused no longer". President Trump also said tariffs are often reciprocal but are sometimes "beyond reciprocal".

Expected announcement: 2 April

As noted in our last update, President Trump stated it is the intention of his administration to introduce global reciprocal tariffs from 2 April, stating “we're going to do it in April. I'm a very superstitious person. April 2, reciprocal tariffs kick in, and whatever they tariff us, other countries, we will tariff them”.

Today, during his meeting with the Taoiseach, President Trump reiterated that “April 2 is going to be a very big day for the US”.

New Canadian PM Mark Carney address President Trump

Away from US-EU relations, Canada’s Prime Minister-designate, Mark Carney, has vowed to take on Donald Trump and urged his country to unite in a defiant acceptance speech.

The former Bank of England Governor, who will be sworn in as Justin Trudeau’s successor in the coming days, was on Sunday night (9 March) elected as Canada’s new Prime Minister by the country’s governing Liberal Party as tensions escalate over tariffs with its closest neighbour. Carney said Canada will keep its initial retaliatory tariffs in place until “the Americans show us respect.”

Key actions businesses can take today

US import tariffs on EU goods now appear to be an imminent reality. Key actions that can and should be taken include:

• Assessing your customs data to understand your exposure;
• Determining the customs origin of goods shipped to the US to see if they are considered EU-originating; and
• Gaining oversight of the end-to-end supply chain, including having the right data, to assess the impact on material sourcing and exposure for tariffs on component parts.