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Businesses warn tariffs would be felt across supply chain

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New tariffs scheduled to take effect on March 12

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EU plans countermeasures, may reactivate 2018 tariffs

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Mexico does not forecast retaliatory measures

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Canada to defend against tariffs, highlights negative

impact on

trade

By Jarrett Renshaw, Jasper Ward and Philip Blenkinsop

WASHINGTON/BRUSSELS, Feb 11 (Reuters) - U.S. President

Donald Trump's planned 25% tariffs on steel and aluminum imports

would pile on top of other levies on Canadian goods, resulting

in a total 50% tariff if threatened duties on all imports from

Canada are enacted in March, a White House official said on

Tuesday.

Canada has not been told about the additive nature of

the tariffs, a Canadian government source told Reuters, adding

that it "sounds plausible."

Mexico, Canada and the European Union condemned Trump's

metals tariffs on Tuesday and governments around the world

braced for even more levies from the new administration amid

fears of an escalating global trade war.

Businesses around the United States also warned of fallout,

with many manufacturing-heavy companies finding it difficult to

plan next steps or determine if Trump will follow through. The

tariff hike would reverberate across the supply chain, affecting

all businesses that rely on the materials, they said.

Trump signed proclamations late on Monday raising the U.S.

tariff rate on aluminum to 25% from his previous 10% rate and

eliminating country exceptions and quota deals as well as

hundreds of thousands of product-specific tariff exclusions for

both metals.

The measures, due to take effect on March 12, will apply to

millions of tons of steel and aluminum imports from Canada,

Brazil, Mexico, South Korea and other countries that had been

entering the U.S. duty free under the carve-outs.

Mexican Economy Minister Marcelo Ebrard called the tariff

decision "not justified" and "unfair." He did not say if Mexico

planned reciprocal tariffs on steel or aluminum it imports from

the United States.

Canadian Prime Minister Justin Trudeau said the tariffs were

"unacceptable." Canada's response, if needed, would be firm and

clear, he said at an artificial intelligence summit in Paris.

The Canadian Press, citing a senior government official,

said Trudeau spoke with U.S. Vice President JD Vance about the

impact the steel tariffs would have in Ohio, which Vance

previously represented in the U.S. Senate.

Vance was also planning to

discuss

trade and economic issues with European Commission

President Ursula von der Leyen at the Paris summit after she

said the 27-nation bloc would take "firm and proportionate

countermeasures" to the new tariffs.

READY TO RETALIATE

Von der Leyen said she deeply regretted the U.S. decision,

adding that tariffs were taxes that were bad for business and

worse for consumers. EU steel exports to the U.S. have averaged

about 3 billion euros ($3.1 billion) a year over the past

decade.

"Unjustified tariffs on the EU will not go unanswered - they

will trigger firm and proportionate countermeasures," she said

in a statement.

One option for the EU would be to reactivate the tariffs it

imposed in 2018 during Trump's first term, which were suspended

under an agreement with his predecessor, President Joe Biden.

The EU tariffs on U.S. products such as bourbon, motorcycles

and orange juice are currently suspended until the end of March.

The American Chamber of Commerce to the EU (AmCham EU),

representing U.S. companies active in Europe, also criticised

the move as harmful to jobs, prosperity and security on both

sides of the Atlantic.

"The damage will extend beyond just the steel and aluminum

sectors, impacting all businesses that rely on these materials

throughout the supply chain," it said in a statement.

COST AND CHAOS

Executives across industries reliant on steel and aluminum

imports were scrambling to offset the cost of Trump's move after

previous tariff threats from the White House that were later

scrapped.

Companies ranging from Coca-Cola and Ford to smaller

aluminum, aerospace and appliance firms expect to be affected by

Trump's moves, which Ford CEO Jim Farley said have so far added

"a lot of cost and a lot of chaos" to American business.

The Coalition of American Metal Manufacturers and Users

(CAMMU) said failure to include a workable exclusion process

would hurt U.S. manufacturers, and especially small- and

medium-sized businesses that were left paying significantly more

for inputs to their production.

"Foreign customers are shifting their supply chains away

from U.S. producers. Once removed, especially for smaller,

family-owned businesses, it is difficult to regain that lost

business," the group said.

It said the threat of retaliatory tariffs from key trading

partners further threatened U.S. exports and manufacturing jobs,

stalling expansion plans and teeing up difficult choices on

investments, retention and long-term growth.

Steel imports accounted for about 23% of American steel

consumption in 2023, according to American Iron and Steel

Institute data, with Canada, Brazil and Mexico the largest

suppliers.

Canada accounted for nearly 80% of U.S. primary aluminum

imports in 2024.

Trump also will impose a new North American standard

requiring steel imports to be "melted and poured" and aluminum

to be "smelted and cast" within the region to curb U.S. imports

of minimally processed Chinese and Russian metals that

circumvent other tariffs.

While China exports only tiny volumes of steel to the U.S.,

it is responsible for much of the world's excess steel capacity,

according to the U.S. It says subsidised production in China

forces other countries to export more and leads to

trans-shipment of Chinese steel through other countries into the

U.S. to avoid tariffs and other trade restrictions.

($1 = 0.9684 euros)