UK warns of 'serious damage' as Trump steams ahead with trade tariffs

Trading partners of the United States have reacted angrily to the White House plans to impose tariffs on steel and aluminium imports.

Canada, the EU, Mexico, China, Brazil and Japan are amongst the nations which would be most effected by the proposal that President Donald Trump announced in response to the US being “decimated by unfair trade and bad policy”.

Under the proposals, steel and aluminium imports would be subject to 25% and 10% tariffs respectively.

In a tweet on Thursday, President Trump said: “We must not let our country, companies and workers be taken advantage of any longer. We want free, fair and SMART TRADE!”

Some nations are exploring the possibility of retaliatory measures, as China commented that it would “definitely take necessary measures to safeguard its legitimate rights”.

Similarly, Jean-Claude Juncker, President of the European Commission, said: “We will not sit idly while our industry is hit with unfair measures. The EU will react firmly and commensurately to defend our interests.”

UK Steel, the trade association for the UK steel industry, reported that the US comprises almost 15% of UK steel exports annually, and thus the proposals would cause "serious damage" to UK steel producers.

Under a clause in a 1962 law The White House has the authority to impose import tariffs in a situation where national security is threatened.

After an investigation into the industry greenlit by Trump last April, the Commerce Department claimed in a report that the effects of imports on the US domestic steel and aluminium industries could have ramifications for the defence industry.

Chad Brown, of the Peterson Institute for International Economics, said: “Because this leads to a downward spiral and erodes meaningful obligations under international trade rules, justifying import restrictions based on national security is really the ‘nuclear option’.”

As news of the proposal came to light, markets around the world have dipped, with the Dow Jones Industrial Index losing 1.7% overnight and the Nikkei 225 down 2.5% as concern spread in the Asian market, with export-reliant Germany's Dax down 2% and London's FTSE falling 0.7%.

UK Steel said there was still a hope that these tariffs may not target the UK and EU but that Trump’s comments did indicate the introduction of blanket measures to restrict the import of all steel imports regardless of their origin.

“This would be a unilateral, and extremely blunt, approach to what is a complex global problem of overcapacity in the steel sector," said Richard Warren, head of policy at the trade body.

"This requires a coordinated global approach. Whilst we all too well understand the frustrations of the US sector, measures such as these smack of short-termism, protectionism and would be rife with unintended consequences for global trade and for the users of steel in the US."

Warren said the measures, would "seriously undermine our ability to compete in this market" and could see steel trade diverted away from the US to other markets, such as the UK. "In short, these measures would cause serious damage to the prospects of many steel producers here."