In the first formal indications of outright trade war, Canada and the European Union, traditionally allies of the US, Wednesday (March 12) announced retaliatory measures to combat the sweeping tariffs on steel and aluminium imports to the US. The 25 percent tariffs on the metals came into effect earlier on Wednesday. However, some countries like the UK, Australia, Mexico and Brazil abstained from announcing immediate countermeasures. The UK, in particular, said it was hoping to negotiate a trade deal with US President Donald Trump, but would “keep all options on the table.” “Like everybody else, I'm disappointed to see global tariffs in relation to steel and aluminium but we will take a pragmatic approach,” UK Prime Minister Keir Starmer said. “We are. negotiating a deal which covers and includes tariffs if we succeed. But we will keep all options on the table.” First, what did the US do now? Tariffs are essentially taxes on imports and may be levied by countries as a protectionist measure. The tariffs levied by the US aim to protect American manufacturing against foreign competitors and boost employment in the process. In February, the US increased tariffs on all steel and aluminium imports into the US to 25 percent “without exceptions or exemptions”, meaning allied countries who have trade deals with the US would also be affected. These became effective on Wednesday. These tariffs built up on the Section 232 tariffs he imposed in his first term on the two metals on national security grounds. The levies are now extended to a wide range of products, such as stainless steel sinks, horseshoes, aluminium frying pans and steel door hinges. According to a White House official who spoke to Reuters, exemptions to the 2018 tariff had eroded its effectiveness. Which countries are affected by these tariffs? Effectively every country that exports steel and aluminium to the US. In February, Trump had already singled out China, the world’s largest steel producer, for a 10% tariff on all imports from the country. US imports of Chinese steel and aluminium were valued at $12.5 bn in 2024, according to US International Trade Administration data. He had also announced a similar 25% blanket tariff on all imports from Canada and Mexico, justifying this as a response to illegal migration and drugs crossing into the US. Canada alone accounted for 23% of US steel imports and 58% of US aluminium imports in 2024, valued at $13 bn, according to US International Trade Administration data. Similar imports from Mexico were valued at $10.4 bn. On Wednesday, Trump threatened to double the tariff on steel and aluminium from Canada to 50% hours after the original order came into effect. This was thwarted once the Ontario premier, Doug Ford, backtracked on a plan for a 25% surcharge on electricity exports to the US. How have different countries responded? Why is the UK holding out? Quite simply, the UK cannot afford to enter into a trade war with the US. Former Chancellor of the British Exchequer and Conservative Party MP Jeremy Hunt told The Guardian last month that a trade war was futile and costly, given that UK steel and aluminium formed a tiny portion of American imports. “The reason that you generally hit back with retaliatory tariffs, which is what China, America, Canada and Mexico are all in the process of doing, or threatening to do, is to give you leverage so that the other side then wants to remove the tariffs that they’ve introduced,” he said. “Our…goods exports to the United States account for less than 0.5 percent of US GDP. So we should be very realistic, we don’t have any leverage when it comes to that.” He also cautioned against the risks to British manufacturers who use imported raw materials, and inflation from a potential trade war.
