As the Trump administration places tariffs on steel and aluminum, the UK seeks work toward a trade deal with the United States. The imposition of these taxes immediately sparked a response within the European Union, who is planning in retaliation to place tariffs on US products exceeding several billion euros. Although the UK has remained silent regarding clash tariffs, they now focus on a wider economic agreement with the EU, while the Conservative leadership accuses Labour for having a clear plan.
While these are set to increase consumer spending and place financial strain on the taxpayer, Trump wants to strengthen the American industry through the 25 percent tax placed on steel and aluminum. As positive as this may sound, critics say that the high looming price tags will only serve to boost inflation, adding a load of debt on the already burdened economy.
Consequently, US companies that import steel and aluminium will experience cost increases due to the tariffs, which will most likely be passed on to the consumer. The European Union, meanwhile, has instituted retaliatory tariffs on American goods worth €26 billion (£22 billion) that will come into effect partially on April 1 and fully by April 13. President of the EU Ursula von der Leye noted that, while the tariffs may serve their purpose, they create renewed uncertainty and disrupt supply chains at the same time.
According to Secretary of Business in the UK Jonathan Reynolds, the tariffs are “disappointing,” though he does believe that the UK will be able to strike a trade deal with the United States. Reynolds further noted that the UK is working alongside impacted businesses while preparing to defend the national interest. On the other side of the aisle, Shadow secretary of business for the Conservatives Andrew Griffith has come out and spoken against Labour for not going to America to negotiate and attempt to strike a deal.
Regarding the tariffs, the American Iron and Steel Institute (AISI) has expressed support claiming that the tariffs will increase employment and domestic production of steel as loopholes for foreign producers to bypass the tariffs will be closed. The American market is supplied with aluminium and steel from Canada, Mexico, and Brazil who are the primary suppliers to the US.
Prime Minister Anthony Albanese from Australia wasted no time condemning the taxes, calling them “entirely unjustified”. While other countries rushed to respond to the tariffs, it looks like Albanese was not eager to take on this battle, as he also decided against imposing any retaliatory duties that would burden Australian consumers. Canada’s energy minister was also clear in his message by warning that Canada would strike back, but they wish to avoid macro level escalation due to Canadian’s tight trade relationships with the US.
Gareth Stace was visibly angry when mentioning the tariffs that the US is imposing on the UK side of the Atlantic, noting that some contracts have already encountered unfortunate events of cancellation and delays. Contracts aside, the reality is that US customers will be confronted with paying additional £100 million per year because of the tariffs, which indeed could not be coming at a more difficult time for the UK steel industry that is seeing persistently high and rising increases in energy and other imported goods prices.
As ESRG’s Bruce Halle pointed out, allowing amplified pricing skeins is accentuating a tendency to overestimate implications which, in the end, would shift the burden to consumers. This statement was directly met with agreement by the American Automotive Policy Council, and the reservations additively made to them by some council constituents, some of them from Canada, argue the withdrawal of exemptions to Canada and Mexico would hand over car manufacturers lower budgets but sub-par quality cars.
Although the tariffs may temporarily stimulate the US steel and aluminium industries, analysts are concerned that the overall economy would suffer, increasing costs for consumers. The anticipated economic fallout has already caused a selloff in US and international stock markets, which was worsened by Trump’s failure to rule out a recession.
Oxford Economics Research lowered its forecast for U.S. economic growth from 2.4% to 2% for the year, and made even bigger downgrades for Canada and Mexico. Still, the firm expects the American economy to remain the strongest over the next few years relative to other advanced countries, despite this downgrade.
