President Trump’s sweeping tariffs on foreign steel and aluminum went into effect on Wednesday, inviting immediate retaliation from the European Union and escalating tensions with other trading partners reeling from his on-and-off approach to steep trade penalties.
Mr. Trump’s tariffs of 25 percent hit metal imports from every country that sells steel and aluminum to the United States. Many domestic steel and aluminum makers support the move, saying it will help protect their industry against foreign competitors. But the tariffs are expected to raise costs for American businesses that use foreign metals, including manufacturers of cars, canned food and drinks, solar panels and other products.
Some trading partners have vowed to retaliate by issuing levies aimed at hurting U.S. exporters. Canada, a major supplier of metal in the United States, said that it would impose new retaliatory tariffs on $20 billion worth of American imports, including metals, computers and sporting goods. And the European Union swiftly announced tariffs on up to $28 billion worth of American goods, including bourbon, boats and motorcycles.
Those conflicts could spiral into even bigger trade wars. Asked on Wednesday if he would retaliate against the E.U. tariffs, Mr. Trump said, “Of course I will respond.”
Many other governments — like Japan, Australia, Mexico, Brazil and Britain — chose not to react, at least for now, for fear of worsening relations and the impact on their own economies. Those countries are also girding for the next round of Mr. Trump’s tariffs on April 2, when the president has said he will impose tariffs on foreign cars and countries that he says discriminate against the United States.
Mr. Trump’s recent trade moves have rocked stock markets and exacerbated concerns about the economy. Stock markets shifted between gains and losses on Wednesday as investors weighed concerns about tariffs against better-than-expected inflation data for February. Analysts have warned that Mr. Trump’s sweeping plan for tariffs could push inflation higher in the future and slow the economy.
On Monday, Goldman Sachs slashed its 2025 economic growth forecasts for the United States to 1.7 percent from 2.4 percent, citing adverse trade policy.
“This may be the calm C.P.I. report before the storm,” said Seema Shah, chief global strategist at Principal Asset Management, referring to the inflation data. She said that, with tariff policies, the inflation picture could potentially get “uglier as the months go on.”
The action on metals is just the latest attempt by Mr. Trump to leverage the power of tariffs and the American market against foreign governments. Last week, he issued steep tariffs on imports from Canada, Mexico and China, blaming those countries for the entry of drugs and migrants into the United States, before quickly paring some of the tariffs back.
Mr. Trump’s approach has sent many U.S. allies into a defensive mode as they try to figure out how to mollify the president while also protecting their own industries. On Tuesday, Mr. Trump threatened to double the tariffs on Canadian metal after the province of Ontario responded to his previous tariffs by putting a surcharge on electricity exported to the United States. Within hours, Ontario had suspended its surcharge, and Mr. Trump walked back his threats.
The steel and aluminum tariffs restore and expand similar steps that Mr. Trump put in place in 2018, which ushered in several long-running trade spats. Mr. Trump argued that the tariffs were needed to protect national security and provide a reliable source of metal for the military in wartime.
But the metal tariffs mainly affect U.S. allies: Canada is by far the largest supplier of both steel and aluminum to the United States. Brazil, Mexico, South Korea and Vietnam also ship the United States significant amounts of steel, while the United Arab Emirates and China send the United States aluminum.
Since Mr. Trump first issued the tariffs in 2018, both he and former President Joseph R. Biden Jr. made deals with foreign countries, including Brazil, Mexico, Canada and the European Union, that whittled away at the tariffs. The U.S. metals industry has complained that the measures were no longer strong enough to keep steel mills and aluminum smelters afloat.
U.S. Steel, one of the country’s sole surviving makers of primary steel, has warned that it will need to shut down plants and lay off workers unless it finds a more deep-pocketed acquirer. The chief executive of Cleveland Cliffs, the country’s other primary steel maker, said that last year had been “the worst year for domestic steel demand” in over a decade.
“Things would be, without those tariffs, much worse for the industry,” said Kevin Dempsey, the president of the American Iron and Steel Institute, an industry group.
Because steel and aluminum are used to make so many other products, however, tariffs that raise the price of the metals have consequences for many other manufacturers, and for the U.S. economy.
By increasing costs of basic inputs for many companies, the tariffs could harm factories that ultimately employ far more Americans than steel mills and aluminum smelters do. Economists say that could potentially backfire on Mr. Trump’s plans to bolster U.S. manufacturing.
An economic analysis published by the U.S. International Trade Commission, an independent, bipartisan agency, suggested that the overall costs to the U.S. economy from Mr. Trump’s first term metal tariffs outweighed the gains.
The study found that the metal tariffs levied in 2018 encouraged buyers of steel and aluminum to purchase more from U.S. sources, led to higher domestic prices for metals and expanded U.S. steel production by about 2 percent between 2018 and 2021, the years the report studied.
But the analysis also found that the tariffs raised production costs for firms making automobiles, tools and industrial machinery, shrinking production in those and other downstream industries by about $3.48 billion in 2021. The steel and aluminum industries produced about $2.25 billion more in metals that year because of the levies.
In an effort to mitigate the harmful consequences on other industries that use steel and aluminum, the Trump administration has expanded its steel and aluminum tariffs this time to also protect various downstream goods, or “derivative products” made with metal, such as tractor parts, metal furniture and hinges.
Chad Bown, a senior fellow at the Peterson Institute for International Economics, a research organization, said that move was an “implicit acknowledgment” that some industries were suffering because of Mr. Trump’s previous tariffs.
He said that the tariffs created a “cycle of cascading protectionism” in which more industries would ask for government safeguards, and that it “may be difficult to stop” once it gets going.
“Where does it end?” Mr. Bown asked.
The prospect of higher costs has also encouraged other U.S. industries, like automakers, to lobby for tariffs on their foreign competitors to protect their businesses. Mr. Trump has said he plans to levy a tariff on foreign cars on April 2.
For automakers, the metal tariffs threaten to raise costs when prices of new cars and trucks are already near record highs. The average price of a new vehicle in January was more than $48,000, according to Edmunds, a market research group.
“Affordability is already a major concern for American car shoppers amid elevated prices and interest rates,” said Jessica Caldwell, head of insights at Edmunds.
Robert Budway, the president of the Can Manufacturers Institute, a trade group that represents companies making cans for food, soda, beer and paint, said that tariffs would result in higher packaging costs, which would ultimately be passed to American consumers.
Since Mr. Trump imposed tariffs on steel in his first term, food packagers have been relying more on imported metals, and simply paying more for them, Mr. Budway said.
“It just makes the price higher,” Mr. Budway said.
Major American export industries, particularly farmers, will also be hit by retaliatory tariffs on billions of dollars of American exporters, including poultry, beef, pork and soybeans.
Canadian officials said Wednesday that their retaliation would come in addition to a 25 percent tariff their government put on $30 billion of American goods this month in response to Mr. Trump’s prior levies.
Gabriel Brunet, a spokesman for the finance minister, Dominic LeBlanc, who is leading Canada’s trade response, said Canada was “ready to respond firmly and proportionately” to any U.S. tariffs.
Britain’s trade secretary, Jonathan Reynolds, called the tariffs “disappointing.” The country was investigating steps to protect local producers and negotiating an agreement with the United States to eliminate additional measures, he said on Wednesday.
Australia would not impose reciprocal tariffs, Prime Minister Anthony Albanese said, because it would push up prices for Australian consumers. In Mexico, President Claudia Sheinbaum said her country would wait until April 2, when Mr. Trump is considering his next round of tariffs, to decide whether to retaliate.
Brazil, the second largest importer of steel to the United States after Canada, also signaled that it would not retaliate. “President Lula said to remain calm at this time,” Brazil’s economy minister, Fernando Haddad, told reporters on Wednesday. “We’ve negotiated under worse conditions than this.”
The European Union announced Wednesday that it would have a two-part response to the tariffs. Officials will allow a suspended set of tariffs to take force on April 1, affecting everything from boats to bourbon. They are also finalizing which other goods — including farm and industrial products — to strike with higher tariffs.
The European Union’s goal is to hit the United States as hard as it is hitting Europe’s economy, in hopes of drawing America to the negotiating table.
But Maros Sefcovic, the trade commissioner for the European Union, said during a news briefing Monday that the U.S. administration “does not seem to be engaging to make a deal.”
“In the end, as it is said, one hand cannot clap,” he said.
Trump officials have implied that, at least for the metal tariffs, deal making is not on the table. Asked what it would take to remove steel and aluminum tariffs, Howard Lutnick, the commerce secretary, said Wednesday that Mr. Trump views metals as “fundamental for our national security.”
“The president wants steel and aluminum in America. And let me be clear, nothing’s going to stop that until we’ve got a big, strong domestic steel and aluminum capability,” he said.
Reporting was contributed by Neal E. Boudette, Danielle Kaye, Ian Austen, Jack Nicas and Paulina Villegas.