Trump says no exemptions with metal tariffs to start in March

Leaders in Europe and Canada have said they will not let Donald Trump's plans to hit their steel and aluminium exports with tariffs go unchallenged.

European Commission President Ursula von der Leyen said the move would trigger "firm and proportionate countermeasures" while Prime Minister Justin Trudeau also pledged to "stand up for" Canadian workers and businesses.

The comments came after the US president ordered a 25% import tax on all steel and aluminium entering the US, ending previous exemptions for allies including Canada and the EU and marking a major expansion of trade barriers.

Trump said he was "simplifying" the rules and the measures would boost domestic production.

"This is a big deal, the beginning of making America rich again," Trump said, signing the proclamation, which said the measures would come into force on 12 March.

"Our nation requires steel and aluminium to be made in America, not in foreign lands," he added.

The US is the world's largest importer of steel, counting Canada, Brazil and Mexico as its top three suppliers.

Canada alone accounted for more than 50% of aluminium imported into the US last year.

The tariffs will raise the cost of bringing the metals into the US, sparking concern among businesses in the US that rely on the imports and many world leaders because it will make it more expensive for companies to sell their products in the world's largest economy.

If the tariffs come into force as outlined, they are expected to have the most significant impact on Canada.

Late on Monday, Canada's Minister of Innovation, Francois-Philippe Champagne, said the tariffs were "totally unjustified".

Trudeau said he hoped talks with the Trump administration would avoid dollar-for-dollar retaliation.

But the lobby group for Canadian steel makers called on the Canadian government to retaliate against the US "immediately", while Kody Blois, a leading MP from Canada's governing Liberal Party, said his country was looking for ways to reduce its trade relationship with the US.

"This is completely upending what has been a very strong partnership," he told BBC Newshour ahead of the official order.

European Commission President Ursula von der Leyen also warned "unjustified tariffs on the EU will not go unanswered".

"They will trigger firm and proportionate countermeasures. The EU will act to safeguard its economic interests," she said. "Tariffs are taxes - bad for business, worse for consumers."

Share prices of the major US steelmakers rose on Monday in anticipation of the order, with the price of Cleveland-Cliffs jumping nearly 20%. Prices for steel and aluminium also jumped, while the Canadian dollar and the Mexican peso fell.

But the response in much of the rest of the market was muted, reflecting questions about how serious Trump is about his plans, given his track record of postponing tariffs, or negotiating exemptions to the rules.

"The market I think is beginning to wonder, to what degree is this a negotiation tactic by Trump or to what degree is he really willing to push these tariffs through?" said Jane Foley from Rabobank.

In 2018, during Trump's first term, he announced tariffs of 25% on steel and 15% on aluminium, but he eventually negotiated carve-outs for many countries including Australia, Canada and Mexico.

"This is sort of a replay of 2018," said Douglas Irwin, a professor of economics at Dartmouth College.

"The biggest question is the uncertainty over whether this is a bargaining tactic or whether he just doesn't want to talk with other countries and really wants to help out the steel industry in that way."

Last week, Trump ordered import duties of 25% on all Canadian and Mexican products, only to delay that plan for 30 days. He also brought in new US levies of 10% on all Chinese goods coming into the US, prompting retaliation from China.

A tariff is a domestic tax levied on goods as they enter a country, proportional to the value of the import.

The taxes are a central part of Trump's economic vision. He sees them as a way of growing the US economy, protecting jobs and raising tax revenue.

But there are also concerns about the effect in the US, where many manufacturers use steel and aluminium in their products and now face added costs.

Industry groups from construction to can-makers warned about the hit.

When asked if tariffs could increase prices for consumers, the US president responded: "Ultimately it will be cheaper."

"It's time for our great industries to come back to America... this is the first of many," he added, suggesting other tariffs could focus on pharmaceuticals and computer chips.

In Trump's first term, the tariffs, despite many exemptions, raised the average price of steel and aluminium in the US by 2.4% and 1.6% respectively, according to the US International Trade Commission.

Stephen Moore, who advised Trump's campaign on economic issues in 2016 and is currently a senior fellow at the Heritage Foundation, a conservative think tank based in Washington, said he did not think tariffs on steel and aluminium were effective way to create jobs, noting the experience of the first term.

He said while Trump was "deadly serious" about trade, he thought the plan was "about getting the rest of the world's attention".

"Just about everything Donald Trump does in Washington is a negotiating tactic," he said.

Trump officials said the latest moves were aimed at stopping countries such as China and Russia from avoiding tariffs by routing low-cost products through other countries.

The US president said he was introducing new standards that require steel to be "melted and poured" and aluminium to be "smelted and cast" in North America.

Nick Iacovella, a spokesman for Coalition for a Prosperous America, which represents steel-makers and supports the tariffs, said his group is most concerned about a surge of steel imports from Mexico, above levels agreed in 2019.

But he noted that Canada sends far more goods to the US than it imports - a trade deficit that has been a key issue for Trump.

"There are still imbalances with the Canadian and United States trading relationship that should be addressed," he said.

He added: "I don't think they're planning to take a one-size-fits-all hammer approach to this, but I think early on, in the beginning at least right now, I do think what the president is saying ... [is] both of those countries [Canada and Mexico] are abusing their relationship with the US and we're going to do something about it."