Update, May 31, 2018: After previously announcing exemptions for U.S. allies, President Trump announced a 25% tariff on steel and aluminum imports from Canada, the European Union, and Mexico.
This piece was originally published on March 9, 2018. The original, unedited text appears below.
Last week, President Trump announced a 25% tariff on all steel imports and a 10% tariff on all aluminum imports. Despite outcries from higher ups in his party and administration (he apparently made the decision almost unilaterally) and promises from U.S. allies around the world to retaliate with tariffs in response, Trump doubled down on the move this week.
Most media coverage has been focused on the swift response of the European Union and the potential implications for the renegotiation of NAFTA. But Trump’s decision is especially damaging for U.S. relationships in the Western Hemisphere.
According to Census Bureau data, 40.39% of U.S. steel imports and 54.03% of U.S. aluminum imports in 2017 came from the Western Hemisphere. Canada, Brazil, and Mexico, the three largest sources of steel imports in the hemisphere, are also the first, twelfth, and second biggest markets for U.S. exports, respectively. In other words, all three countries have significant leverage over U.S. exports should they choose to exercise it in retaliation for Trump’s tariffs.
Responses from around the Americas have been expectedly swift. Mexican Minister of the Economy Ildefonso Guajardo called the tariffs “the wrong way to incentivize the creation of a new and modern NAFTA.” The Brazilian Ministry of Industry, Foreign Trade and Services published a press release criticizing the decision and ominously noting that Brazil is the largest global importer of U.S. steel coal. Members of Brazilian unions took to the streets outside the U.S. Consulate in São Paulo to protest the decision.
Uncharacteristically, the regional response was strongest from Canada. Minister of Foreign Affairs Cynthia Freeland vowed that the Canadian government would take action in response and called the tariffs “absolutely unacceptable.” That’s some scary language from our usually mild mannered northern neighbors.
It remains to be seen whether the Republicans and members of the administration who hold any influence over President Trump will be able to convince him to change his mind. Until then, U.S. regional trade partners will watch anxiously and hope to avoid a further escalation of already-tense hemispheric relationships.
