President Trump on Thursday slapped tariffs on steel and aluminum imports from the European Union, Canada and Mexico, moving to punish what he said was unfair competition that has sapped the U.S. economy, but seemingly laying the ground for trade war.
Just hours after announcing the tariffs — 25 percent on steel and 10 percent on aluminum — Mr. Trump delivered an ultimatum on the ongoing negotiations for updating the North American Free Trade Agreement. Unless Canada makes concessions, he said, the deal will be scrapped.
“The United States has been taken advantage of for many decades on trade. Those days are over,” Mr. Trump said in a defiant statement. “Earlier today, this message was conveyed to Prime Minister Justin Trudeau of Canada: The United State will agree to a fair deal, or there will be no deal at all.”
That tough talk came after U.S. markets had closed for the day on the tariff news, and analysts were anxious about how they would react to what appeared to be the groundwork for an all-out trade war.
Mr. Trudeau didn’t shy away from the notion.
“We’re ready for anything,” he told reporters in the afternoon, reacting to the tariffs.
He announced retaliatory duties on U.S. aluminum and steel and a host of other products. Mexico said it would raise duties on imports including pork, grapes and cheese. Canada and the European Union said they will file official complaints with the World Trade Organization, seeking to have the U.S. actions declared illegal.
Mr. Trudeau also revealed the troubled NAFTA talks, telling reporters he had flatly rejected a U.S. demand that any new deal sunset after five years.
It was that public rejection that appeared to draw the return shot from Mr. Trump, threatening the existence of the 25-year-old trade agreement, which most analysts say has been good for all three countries. Mr. Trump, however, says the U.S. is still losing compared with Canada and Mexico.
Before the NAFTA fight broke out, U.S. officials downplayed the chances of major economic disruption from the tariffs.
“These are blips on the radar screen — I don’t think they change the fundamentals of the relationship,” Commerce Secretary Wilbur Ross told CNBC. “Everybody has spats every now and again. Every family does, every country does with others — there’s nothing weird about that. I think everybody will get over this in due course.”
He also doubted that American consumers will feel the effects of the tariffs. As an example, he said they would raise the price of a can of beer by “a fraction of a penny.”
Mr. Trump, in proclamations announcing the tariffs, called them a matter of national security. He said the U.S. needed a steady supply of aluminum and steel to maintain its military strength and suggested that reliance on imports undercut that.
Political allies and opponents of Mr. Trump ridiculed that notion.
“This is dumb,” said Sen. Ben Sasse, Nebraska Republican. “Europe, Canada and Mexico are not China, and you don’t treat allies the same way you treat opponents. We’ve been down this road before — blanket protectionism is a big part of why America had a Great Depression. ‘Make America Great Again’ shouldn’t mean ‘Make America 1929 Again.’”
House Speaker Paul D. Ryan, Wisconsin Republican, was less florid but still clear in his break with a president he has generally supported.
“Today’s action targets America’s allies when we should be working with them to address the unfair trading practices of countries like China,” Mr. Ryan said. “There are better ways to help American workers and consumers. I intend to keep working with the president on those better options.”
Mr. Trump signaled earlier this year that the tariffs were coming but also invited targeted countries to make the case that they should be exempted. Brazil, Argentina and Australia reached what Mr. Trump called satisfactory deals to head off tariffs with quota limits.
Canada, Mexico and the European Union apparently fell short.
The administration has repeatedly used tariffs as part of get-tough trade policies, with a decision on automobile imports still looming. That could particularly hit China, though other nations were also preparing for a negative decision.
Support for Mr. Trump’s tariffs decision was tough to find Thursday. Liberal-leaning labor unions, conservative free trade organizations, farmers, business organizations, and Democrats and Republicans in Congress all said the president’s decision was misguided.
“These tariffs are hitting the wrong target,” said Rep. Kevin Brady, Texas Republican and chairman of the House Ways and Means Committee. “When it comes to unfairly traded steel and aluminum, Mexico, Canada and Europe are not the problem — China is.”
He said he would hold hearings and make the administration defend its decisions.
The Commerce Department this year determined a need to ensure adequate U.S. steel production capacity to supply the military. Mr. Trump announced global tariffs as the official response to that determination.
He delayed the tariffs’ effective date for some of the country’s closest allies to make their cases. The announcement Thursday shows those appeals failed, and the tariffs will take effect Friday morning.
Mr. Trudeau was outraged by Mr. Trump’s claims of security. He said the decision was a betrayal of 150 years of partnerships in which Canadian troops fought and died alongside American troops against fascism and terrorism.
“That Canada could be considered a national security threat to the United States is inconceivable,” he said.
Canada’s retaliatory tariffs will take effect in a month, but Mr. Trudeau insisted that Americans shouldn’t take it personally.
“Americans remain our partners, our allies and our friends. This is not about the American people,” he said. “We have to believe that at some point common sense will prevail. But we see no sign of that in this action today by the U.S. administration.”
The European Commission’s top trade official, Cecilia Malmstrom, said they had repeatedly pleaded with Mr. Ross to forgo the tariffs and try to come up with a joint solution. But she said the Trump administration seemed determined to use the tariffs to demand unilateral concessions.
“Today is a bad day for world trade,” she said.