*

US duty rate on steel, aluminum rises to 25% as exemptions

end

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Trump threatened 50% Canada metals tariff rate, but backed

off

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Hundreds of products made from steel and aluminum get new

US

tariffs

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Canadian officials head to Washington to discuss USMCA

trade

deal

By David Lawder and Andrea Shalal

WASHINGTON, March 12 (Reuters) - U.S. President Donald

Trump's increased tariffs on steel and aluminum imports took

effect on Wednesday as prior exemptions, duty free quotas and

product exclusions expired, as his campaign to reorder global

trade norms in favor of the U.S. stepped up.

Trump's action to bulk up protections for American steel and

aluminum producers restores effective global tariffs of 25% on

all imports of the metals and extends the duties to hundreds of

downstream products made from the metals, from nuts and bolts to

bulldozer blades and soda cans.

The runup to the tariff deadline came with some drama on

Tuesday as Trump threatened Canada with doubling the duty to 50%

on its steel and aluminum exports to the U.S.

But Trump backed off those plans after Ontario Premier Doug

Ford agreed to suspend his province's decision to impose a 25%

surcharge on electricity exports to the states of Minnesota,

Michigan and New York until earlier U.S. tariffs were removed.

Ford said he would fly to Washington on Thursday with

Canadian Finance Minister Dominic LeBlanc for talks with

Commerce Secretary Howard Lutnick and other Trump officials to

discuss revising the U.S.-Mexico-Canada Agreement on trade.

The incident whip-sawed U.S. financial markets already

jittery over Trump's broad tariff offensive, but left unchanged

Trump's original plans to strengthen the Section 232 national

security tariffs on steel and aluminum imposed in 2018 during

his first term.

A White House spokesperson described the U.S. pressure on

Canada as a "win" for the American people.

The U.S. Customs and Border Protection agency cut off

imports qualifying for duty-free entry under quota arrangements

well before the midnight deadline, saying in a bulletin to

shippers that quota paperwork needed to be processed by 4:30

p.m. local time on Tuesday at U.S. ports of entry or the full

tariffs would be charged.

The move was welcomed by U.S. steel producers as restoring

Trump's original 2018 metals tariffs that had been weakened by

numerous country exclusions and quotas and thousands of

product-specific exclusions.

"By closing loopholes in the tariff that have been exploited

for years, President Trump will again supercharge a steel

industry that stands ready to rebuild America," Steel

Manufacturers Association President Philip Bell said in a

statement.

"The revised tariff will ensure that steelmakers in America

can continue to create new high-paying jobs and make greater

investments knowing that they will not be undercut by unfair

trade practices," Bell added.

The countries most affected by the tariffs are Canada, the

biggest foreign supplier of steel and aluminum to the U.S.,

Brazil, Mexico and South Korea, which all have enjoyed some

level of exemptions or quotas.

The escalation of the U.S.-Canada trade war occurred as

Prime Minister Justin Trudeau prepared to hand over power this

week to his successor Mark Carney, who won the leadership race

of the ruling Liberals last weekend.

On Monday, Carney said he could not speak with Trump until

he was sworn in as prime minister. Trump again on social media

said he wanted Canada "to become our cherished Fifty First

State."

Canadian energy minister Jonathan Wilkinson told Reuters

that Canada could impose non-tariff measures such as restricting

oil exports to the U.S. or levying export duties on minerals, if

U.S. tariffs persist.

Canada ships about 4 million barrels of crude to the U.S.

per day via pipeline, mainly to Midwest refineries. Canadian

tariffs on American ethanol are also an option, he added.

Most U.S.-Canada trade remains duty free under the USMCA

trade deal that Trump signed in 2020, but he continues to

complain about Canada's high tariff rates for dairy products.

Ottawa last week won a month's reprieve for USMCA-compliant

exports from Trump's general 25% tariffs for Canada threatened

over fentanyl trafficking.

But in early April, Canada also faces Trump's reciprocal

tariffs aimed at raising U.S. tariffs to match other countries'

rates and counteract non-tariff barriers.

Canada, with ample hydropower resources that has made

primary aluminum production more cost effective than in the

U.S., has built a commanding position in the U.S. aluminum

market, even as U.S. smelters once revived by Trump's tariffs

have been idled.

China remains the number two supplier of aluminum and goods

made from aluminum, but already faces high tariffs to counteract

alleged dumping and subsidies, as well as a new 20% tariff that

Trump has imposed over the past month over fentanyl trafficking.

Trump's hyper-focus on tariffs since taking office in

January has rattled investor, consumer and business confidence

in ways that economists increasingly worry could cause a

recession.

A small business survey on Tuesday showed sentiment

weakening for a third straight month, fully eroding a confidence

boost following Trump's November 5 election victory, and a

survey of households by the New York Federal Reserve on Monday

showed consumers growing more pessimistic about their finances,

inflation and the job market.