Global trade war looms closer as US hits allies with tariffs

The US is proceeding with steel and aluminium tariffs aimed at key allies, including the European Union (EU), in the latest development in global trade tensions.

US Commerce Secretary Wilbur Ross announced today that the US would allow tariff exemptions granted to the EU, Canada and Mexico to expire after recent negotiations failed to satisfy Washington, The Financial Times reports.

The US wants trade concessions from its partners, including a reduction of EU tariffs on US auto imports.

The BBC reports that the tariffs, worth 25 per cent on steel and 10 per cent on aluminium, will come into force at midnight tonight (Thursday).

The targeted economies announced plans to retaliate, CNN reports, with Mexico vowing to hit US lamps, pork, flat steel and cheese with tariffs of their own.

The EU’s reaction was more cautious, with no specific reciprocal tariffs yet announced. However, the bloc has previously said it would target US motorcycles, bourbon and jeans should Washington proceed with its threats.

In a statement, President of the European Commission, Jean-Claude Juncker, hinted at an arbitration approach within the established framework, but left the prospect of retaliatory tariffs clearly on the table.

“The US now leaves us with no choice but to proceed with a WTO dispute settlement case and with the imposition of additional duties on a number of imports from the US,” he said.

However, in comments clearly aimed at China, Juncker added: “By targeting those who are not responsible for overcapacities, the US is playing into the hands of those who are responsible for the problem.”