ASX uncertainty as United States tariffs spark global trade war

The European Commission has said the EU should be permanently exempted from the tariffs

Canada and Mexico retaliated with levies on billions of dollars of USA goods from orange juice to pork and the European Union was set to tax bourbon whiskey and Harley motorcycles after Washington risked a global trade war by imposing steel and aluminium tariffs. It represents an apparent breakdown in Trudeau's efforts to find common ground with the tough-talking president.

"During an OECD trade forum in Paris on Wednesday, Mr. Ross had criticised the European Union for blocking trade negotiations because of the tariffs issue, pointing to China which he said had continued to negotiate on a trade deal".

The CBI warned the move would "damage prosperity on both sides of the Atlantic".

Canadian Prime Minister, Justin Trudeau, described the move as "totally unacceptable", and said it amounted to "an affront to the thousands of Canadians who have fought and died alongside their American brothers in arms". "These are two different countries".

U.S. Commerce Secretary Wilbur Ross made the announcement Thursday morning.

The swift reaction from Canada and Mexico raises the possibility of a trade war between close allies.

Following the US announcement that it would go ahead with increased taxes on imported steel and aluminium, Mexico, Canada and the European Union all said they would impose their own retaliatory tariffs on USA goods.

But European leaders insisted they would entertain none of that so long as Mr. Trump threatened tariffs.

Following the U.S.'s surprise announcement of the tariffs on steel and aluminium earlier this year, the European Commission warned of the possibility of retaliatory action in the forms of tariffs on US imports to Europe such as on Harley Davidson bikes, and Levi's jeans.

On Thursday, the Trump administration announced it was going ahead with plans to slap 25% and 10% tariffs on steel and aluminium from the EU, Canada and Mexico, in what is expected to escalate into a global trade war.

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The peso has dropped 6.4% in May, the biggest monthly decline since November 2016 after Donald Trump won the USA presidential election.

"To be honest with you, I wouldn't mind seeing NAFTA where you'd go by a different name, where you'd make a separate deal with Canada and a separate deal with Mexico", Trump said. Among the gainers, shares of AK Steel rose 3.8 percent while U.S. Steel added 3.4 percent. Mexico said it would penalize US imports including pork bellies, apples, grapes, cheeses and flat steel, as well as cranberries.

The US tried to use the threat of sanctions as "leverage to obtain concessions" from the European Union, but "this is not the way we do business", especially between longstanding allies, she said.

EU members have given broad support to a European Commission plan to set duties on 2.8 billion euros ($3.4 billion) of USA exports if Washington ends tariff exemptions. "Mexico has stated repeatedly that this type of measure, based on national security, is neither appropriate nor justified". "That doesn't necessarily mean that it derails other discussions at all", said Ross.

Trump also told French President Emmanuel Macron of the need to "rebalance trade with Europe", the White House said.

European Commission president Jean-Claude Juncker said the 28-nation EU would announce "counter-balancing measures" following the USA decision.

"I think that we've all had just about enough of Donald Trump...."

Henrik Adam, chief commercial officer of Tata Steel in Europe, said: "We have been, and will continue, to work closely with our customers on potential product exclusions as the vast majority of the products Tata Steel Europe exports to the U.S. can not be made by USA steel companies, such as our extra wide strip, battery quality hot rolled material as well as certain packaging steels". Lamar Alexander, a Tennessee Republican, said Thursday.

"This is Trump versus the world, rather than Trump versus Canada".

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