President Donald Trump’s decision to impose increased tariffs on aluminum and steel imports has triggered immediate retaliation from key trade partners, threatening to escalate tensions and disrupt global commerce. Canada and the European Union (EU) have responded with reciprocal tariffs targeting a wide range of U.S. goods, from agricultural products to consumer goods and industrial equipment.
Canada, the largest supplier of steel and aluminum to the U.S., announced on Wednesday that it will impose 25% counter-tariffs on American steel products. The Canadian government will also raise taxes on various U.S. exports, including tools, computers, servers, display monitors, sports equipment, and cast-iron products.
Across the Atlantic, the EU has also taken a hardline stance. It will introduce tariffs on U.S. goods that include beef, poultry, bourbon, motorcycles, peanut butter, and jeans—many of which are produced in politically significant states for the Trump administration.
“Prices will go up in Europe and the United States, and jobs are at stake,” European Commission President Ursula von der Leyen warned. “We deeply regret this measure. Tariffs are taxes. They are bad for business and even worse for consumers.”
The EU’s tariffs are strategically designed to hit industries in key Republican strongholds. Beef and poultry from Kansas and Nebraska, wood products from Alabama and Georgia, and soybeans from Illinois are all on the list. These moves mirror a strategy used in previous trade disputes, aiming to pressure the U.S. government by hurting industries vital to Trump’s voter base.
Spirits producers are also feeling the impact. The Distilled Spirits Council of the United States criticized the new EU tariffs, warning that they will “severely undercut the successful efforts to rebuild U.S. spirits exports in EU countries.”
The EU is a crucial market for American whiskey, with exports surging by 60% over the past three years after an earlier round of tariffs was suspended. The reimposition of these duties threatens to undo those gains.
This is not the first time Trump has clashed with allies over trade. During his first term, he imposed tariffs on European steel and aluminum, prompting similar countermeasures. The Biden administration had previously brokered a suspension of those tariffs to ease transatlantic tensions, but Trump’s latest move has reopened old wounds.
The EU’s retaliation will unfold in two phases. On April 1, the bloc will reimpose tariffs that were originally in effect between 2018 and 2020. Then, on April 13, additional duties targeting $19.6 billion in U.S. exports will take effect.
Maroš Šefčovič, the EU’s Trade Commissioner, traveled to Washington last month to negotiate with U.S. Commerce Secretary Howard Lutnick, attempting to prevent the tariff escalation. However, his efforts failed. “It became clear during the trip that the EU is not the problem,” Šefčovič said. “I argued to avoid the unnecessary burden of measures and countermeasures, but you need a partner for that. You need both hands to clap.”
Canada has also moved swiftly. Effective from 12:01 a.m. on Thursday, the country will implement 25% reciprocal tariffs on steel products valued at 12.6 billion Canadian dollars ($8.7 billion USD) and aluminum products worth 3 billion Canadian dollars ($2 billion USD). Additionally, Canada will impose tariffs on other U.S. goods worth 14.2 billion Canadian dollars ($9.9 billion USD), bringing the total value of countermeasures to 29.8 billion Canadian dollars ($20.6 billion USD).
These tariffs add to the 25% duties Canada had already imposed on $20.8 billion in U.S. imports in response to previous Trump tariffs, which were initially delayed by a month.
Canada’s incoming Prime Minister, Mark Carney, signaled that he is open to discussions but insisted that any negotiations must respect Canadian sovereignty. “Workers in both countries will be better off when the greatest economic and security partnership in the world is renewed and relaunched,” Carney said.
The economic consequences of the escalating trade war could be severe. The EU estimates that it could lose up to 3.7 million tons of steel exports due to the tariffs, a major blow given that the U.S. is its second-largest export market for steel, accounting for 16% of total EU steel exports.
The EU and the U.S. share an annual trade volume of approximately $1.5 trillion, representing around 30% of global trade. While the EU enjoys a surplus in goods exports, it argues that this is offset by the U.S. surplus in services.
In the U.S., businesses are bracing for the impact. Companies that rely on imported steel and aluminum will face higher costs, which could lead to price hikes for consumers or reduced profits for manufacturers.
The American Chamber of Commerce to the EU issued a stark warning, stating that “the U.S. 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.”
Despite the growing tensions, there are signs that both sides remain open to dialogue. Von der Leyen stated that the EU “will always remain open to negotiation.” Carney echoed a similar sentiment, calling for a “more comprehensive approach for trade.”
However, with Trump doubling down on protectionist policies, the path to de-escalation remains uncertain. If no agreement is reached, businesses and consumers in the U.S., Canada, and Europe will bear the cost of higher prices, reduced trade, and potential job losses.
