Volkswacht Bodensee - US tariffs of 25% on steel, aluminum imports take effect

President Donald Trump's 25 percent duties on both metals will likely add to the cost of producing anything from home appliances to automobiles and cans used for drinks, threatening to raise consumer prices down the road.

"It wouldn't surprise me to see the tariffs pretty quickly show up in prices," Cato Institute research fellow Clark Packard told AFP.

He added that auto manufacturing and construction -- spanning both residential and commercial buildings -- are among the biggest users of steel in the country.

Trump has imposed steep tariffs on major US trading partners Canada, Mexico and China since returning to office, allowing only a partial rollback for his country's neighbors while vowing fresh levies from April 2.

The latest duties will again impact Canada heavily, with the country supplying some 50 percent of US aluminum imports and 20 percent of its steel imports, according to a recent note by EY chief economist Gregory Daco.

Besides Canada, Brazil and Mexico are also key US suppliers of steel, while the United Arab Emirates and South Korea are among providers of aluminum.

Wednesday's levies stack atop earlier ones. This means some Canada and Mexico steel and aluminum products likely face a 50 percent tariff rate unless they are compliant with the US-Mexico-Canada Agreement (USMCA).

Uncertainty over Trump's trade plans and worries that they could tip the world's biggest economy into a recession have roiled financial markets, with Wall Street indexes tumbling for a second straight day on Tuesday.

But Trump has played down fears over his handling of the economy, saying Tuesday he does not see a downturn coming while dismissing losses on Wall Street.

- 'Bumpy' transition -

Trump's trade decisions have come with volatility, with the president threatening to double the tariff rate on Canadian steel and aluminum to 50 percent less than a day before the levies were due to kick in.

Canada's Ontario province had decided to impose an electricity surcharge on three American states in retaliation to earlier US levies, prompting Trump's furious response.

Washington and Ottawa swapped angry tariff warnings throughout the day as trade tensions surged, and Trump doubled down on provocative plans to annex his country's northern neighbor.

But Ontario halted the surcharge after talks with Washington.

White House spokesman Kush Desai said Trump "used the leverage of the American economy" in order to "deliver a win for the American people."

Ontario Premier Doug Ford, US Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer are set to meet in Washington Thursday "to discuss a renewed USMCA ahead of the April 2 reciprocal tariff deadline," according to a US-Canada joint statement.

Asked about Trump's oscillation on tariffs, White House senior counselor Peter Navarro told reporters that the process was "a negotiation."

"It is a transition," he added. "It's going to be at times, perhaps a little bumpy."

- Massive uncertainty -

Even before the latest tariffs took effect, manufacturers have scrambled to find cost-effective domestic suppliers.

The mere threat of protectionism, Packard said, has allowed US steel and aluminum firms to raise their prices.

"It's creating massive amounts of uncertainty," he added.

Some US manufacturers using American steel consider the tariffs a positive development as these have boosted their business.

But others warn that tariffs merely add to the cost of imports while allowing US-made goods to become equally expensive.

Daco of EY also noted that the new steel and aluminum levies go further than measures Trump imposed in 2018 -- covering a range of finished products atop of raw steel and aluminum.

There is also a higher rate on aluminum imports this time and with duties layering onto existing restrictions this is "likely to make foreign sourcing more expensive across multiple industries."

The lack of exemptions Wednesday also comes despite US partners like Australia and Japan visiting Washington in recent days to push for exclusions.

Australian Prime Minister Anthony Albanese said Wednesday the tariffs were "entirely unjustified" but that his country would not retaliate.

It is unclear if Trump will, as he did in his first administration, eventually grant relief to some countries and cut deals with others.

Looking ahead, Trump has vowed separate reciprocal levies as soon as April 2 to remedy trade practices Washington deems unfair, raising the potential for more products and trading partners to be specifically targeted.

D.Schaer--VB