Canada and EU retaliate against Trump, hitting beef, whiskey, motorcycles

Major trade partners have swiftly hit back at US President Donald Trump's increased tariffs on aluminium and steel imports, imposing stiff new taxes on US goods including products from textiles and water heaters to beef and bourbon.

Canada, the largest steel supplier to the US said on Wednesday (early Thursday AEDT) it would place 25 per cent reciprocal tariffs on steel products and also raise taxes on a host of items: tools, computers and servers, display monitors, sports equipment, and cast-iron products.

Across the Atlantic, the European Union will raise tariffs on American beef, poultry, bourbon, motorcycles, peanut butter and jeans

Combined, the new tariffs will cost companies billions of dollars, and further escalate the uncertainty in two of the world's major trade partnerships.

Companies will either take the losses and earn fewer profits, or, more likely, pass costs along to consumers in the form of higher prices.

Prices will go up, in Europe and the US, and jobs are at stake, said European Commission President Ursula von der Leyen.

"We deeply regret this measure. Tariffs are taxes. They are bad for business, and even worse for consumers," von der Leyen said.

The EU duties aim for pressure points in the US while minimising additional damage to Europe.

EU officials have made clear that the tariffs — taxes on imports — are aimed at products made in Republican-held states, such as beef and poultry from Kansas and Nebraska and wood products from Alabama and Georgia. The tariffs will also hit blue states such as Illinois, the No.1 US producer of soy beans, which are also on the list.

The world's biggest trading bloc was expecting the US tariffs and prepared in advance, but the measures still place great strain on already tense trans-Atlantic relations. Only last month, Washington warned Europe that it would have to take care of its own security in the future.

Spirits producers have become collateral damage in the dispute over steel and aluminium.

The EU move "is deeply disappointing and will severely undercut the successful efforts to rebuild US spirits exports in EU countries," said Chris Swonger, head of the Distilled Spirits Council.

The EU is a major destination for US whiskey, with exports surging 60 per cent in the past three years after an earlier set of tariffs was suspended.

Trump vows to take back 'stolen' wealth

The Republican president's use of tariffs to extract concessions from other nations has destabilised the stock market and stoked anxiety about an economic downturn.

"The United States of America is going to take back a lot of what was stolen from it by other countries and, frankly, by incompetent US leadership," Trump told reporters on Wednesday (Thursday AEDT) .

"We're going to take back our wealth, and we're going to take back a lot of the companies that left."

Could there be an agreement that takes increasing tariffs off the table?

Von der Leyen said in a statement that the EU "will always remain open to negotiation".

"As the US are applying tariffs worth $28 billion, we are responding with countermeasures worth €26 billion," she said. The commission manages trade and commercial conflicts on behalf of the 27 EU member countries.

"We firmly believe that in a world fraught with geopolitical and economic uncertainties, it is not in our common interest to burden our economies with tariffs," she said.

The American Chamber of Commerce to the EU said the US tariffs and EU countermeasures "will only harm jobs, prosperity and security on both sides of the Atlantic".

"The two sides must de-escalate and find a negotiated outcome urgently," the chamber said Wednesday.

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"We firmly believe that in a world fraught with geopolitical and economic uncertainties, it is not in our common interest to burden our economies with tariffs," von der Leyen said.

Trump said that his taxes would help create US factory jobs, but von der Leyen said: "Jobs are at stake. Prices will go up. In Europe and in the United States."

American business group urges talks

The American Chamber of Commerce to the EU said the US tariffs and EU countermeasures "will only harm jobs, prosperity and security on both sides of the Atlantic".

"The two sides must de-escalate and find a negotiated outcome urgently," the chamber said Wednesday.

What will actually happen?

Trump slapped similar tariffs on EU steel and aluminium during his first term in office, which enraged European and other allies. The EU also imposed countermeasures in retaliation at the time, raising tariffs on US-made motorcycles, bourbon, peanut butter and jeans, among other items.

This time, the EU action will involve two steps. First on April 1, the commission will reintroduce what it calls "rebalancing measures," which the EU had from 2018 and 2020, but which were suspended under the Biden administration. Then on April 13 come the additional duties targeting €18 billion ($31 billion) in US exports to the bloc.

EU Trade Commissioner Maroš Šefčovič traveled to Washington last month in an effort to head off the tariffs, meeting with US Commerce Secretary Howard Lutnick and other top trade officials.

He said on Wednesday that it became clear during the trip "that the EU is not the problem".

"I argued to avoid the unnecessary burden of measures and countermeasures, but you need a partner for that. You need both hands to clap," Šefčovič told reporters at the European Parliament in Strasbourg, France.

Canada is imposing, as of 12.01am (3.01pm AEDT) on Thursday 25 per cent reciprocal tariffs on steel products worth $CA12.6 billion (US$13.9 billion) and aluminium products worth $CA3 billion as well as additional imported US goods worth $CA14.2 for a total of $CA29.8 billion.

The list of additional products affected by counter-tariffs includes tools, computers and servers, display monitors, water heaters, sport equipment, and cast-iron products.

These tariffs are in addition to Canada's 25 per cent counter tariffs on $CA30 billion of imports from the US that were put in place on March 4 in response to other Trump tariffs that he's delayed by a month.

European steel companies brace for losses

The EU could lose up to 3.3 million tonnes of steel exports, according to the European steel association Eurofer. The US is the second-biggest export market for EU steel producers, representing 16 per cent of the total EU steel exports.

The EU estimates that annual trade volume between both sides stands at about $US1.5 trillion ($2.38 trillion), representing around 30 per cent of global trade. While the bloc has a substantial export surplus in goods, it says that is partly offset by the US surplus in the trade of services.

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