The United States will impose tariffs on steel and aluminum imports from the European Union, Canada and Mexico from midnight Thursday, May 31, ending months of uncertainty over potential exemptions and sharply escalating the risk of a trade war.
The announcement by Commerce Secretary Wilbur Ross was sure to cast a long shadow over a meeting of finance ministers from the world's Group of Seven top economies that opens later in the day in Canada.
The tariffs, which have prompted several challenges at the WTO, are aimed at allowing the U.S. steel and aluminum industries to increase their capacity utilization rates above 80% for the first time in years.
Worries about a U.S. trade war with the European Union weighed on the market's stocks at the open, but shares of U.S. steel and aluminum makers were up strongly.
President Donald Trump's administration has threatened to impose tariffs on car imports, is engaged in negotiations with China to reduce America's yawning trade deficit and has said it will punish Beijing for stealing its technology by imposing tariffs on $50 billion of imports from China.
Meanwhile, negotiations with Canada and Mexico to revise the North American Free Trade Agreement are "taking longer than we had hoped" and there is no "precise date" for concluding them, so their exemption also will be removed, Ross told reporters.
Ross himself heads to Beijing on Friday where he will attempt to get firm deals to export more U.S. goods in a bid to cut America's $375 billion trade deficit with China.
After months in which it appeared the Trump administration had been backing away from tariffs amid infighting between the president's top economic advisers, Washington has during the past week ramped up its threats on trade.
German magazine Wirtschaftswoche reported on Thursday that Trump had told French President Emmanuel Macron he wanted to stick to his trade policy long enough that Mercedes-Benz cars were no longer cruising through New York. That share prices of BMW, Daimler and Volkswagen.
The Trump administration launched a national security investigation last week into car and truck imports, using the same 1962 law that he has applied to curb incoming steel and aluminum.
France's Finance Minister Bruno Le Maire had met with Ross on Thursday in a bid to end the stand-off over steel and aluminum, a move that ultimately failed to sway the U.S. administration.
Europe did not want a trade war, Le Maire said, but Washington had to back down from "unjustified, unjustifiable and dangerous tariffs." The European Union would respond with "all necessary measures" if the United States imposed them.
The European Commission, which coordinates trade policy for the 28 EU members, has said the bloc should be permanently exempted from the tariffs since it is an ally and not the cause of steel and aluminum overcapacity.
The EU has threatened to retaliate with tariffs on Harley Davidson motorcycles and bourbon, measures aimed at the political bases of Republican legislators who they wanted to stand up to Trump.
EU countries have given broad support to the Commission's plan to set duties on 2.8 billion euros ($3.4 billion) of U.S. exports, including whiskey and motorbikes, if Washington ends the EU tariff exemption. EU exports potentially subject to U.S. duties are worth 6.4 billion euros ($7.5 billion).
The Trump administration has given permanent metals tariff exemptions to several countries including Australia, Argentina and South Korea, but in each case set import quotas.
Friday's deadline for exemptions also affects Mexico and Canada, which are in negotiations with the United States on the North American Free Trade Agreement that Trump has said he wants to revamp, or abandon if the talks fail.