New U.S. Tariffs on Steel and Aluminium Take Effect Amid Trade Negotiations

PARIS - The United States has implemented a significant increase in tariffs on imported steel and aluminium, raising rates from 25% to 50%. This change took effect early Wednesday and coincides with ongoing trade negotiations between the U.S. and the European Union.

The announcement from the Trump administration comes as a call for trading partners to submit their best offers in a bid to avoid further punitive import tariffs, which are scheduled to take effect in early July. European businesses have expressed concern over the renewed tariffs, urging the EU to take all necessary measures to eliminate them while trade negotiator Maros Sefcovic met with U.S. Trade Representative Jamieson Greer in Paris.

Sefcovic remarked on the progress of discussions, noting that the talks have become more concrete and focused. He emphasized the need for collaboration between the EU and the U.S. to address the mutual challenge of overcapacity in steel production.

In a related development, British Prime Minister Keir Starmer expressed confidence that U.S. tariffs on UK steel would soon be reduced to zero. The negotiations have been framed around proposals regarding tariffs and quotas for U.S. products, with countries being asked to outline their best suggestions to mitigate the impact of the new tariffs.

The heightened tariffs have already caused volatility in metal markets, particularly impacting aluminium, with price premiums seeing significant increases this year. Industry experts predict that U.S. import volumes may not change substantially unless rising prices negatively affect demand.

Concerns are mounting among businesses as the uncertainty surrounding U.S. trade policy continues to disrupt global markets. For example, French spirits group Remy Cointreau has adjusted its growth projections due to the challenges posed by tariffs and sluggish U.S. sales. Similarly, Austrian steel manufacturer Voestalpine has warned that the new tariffs could adversely affect its earnings.

In the context of North American trade, Canada and Mexico are expected to feel the brunt of these increased tariffs. Reports indicate that Canada, in particular, is vulnerable due to its substantial aluminium exports to the U.S., which are significantly higher than those of other exporting nations combined. Canadian officials have confirmed their ongoing negotiations to address the tariff situation.

Mexico's Economy Minister has also criticized the tariffs as unfair and unsustainable, highlighting that Mexico imports more steel from the U.S. than it exports back.

The current environment of heightened tariffs and trade negotiations is not only affecting steel and aluminium but also raising alarms regarding China's dominance in the critical minerals market. Global automakers, alongside U.S. companies, are voicing concerns over China's export restrictions on rare earth alloys and magnets, which could lead to production delays.