Donald Trump's trade advisers are working on plans for the reciprocal tariffs the US president has vowed to impose on every country that charges duties on US imports, ratcheting up fears of a widening global trade war and threatening to accelerate US inflation further.
The timing of a new round of US duties remained unclear. Progress on the reciprocal tariffs was being made amid talks with other nations that began "really early" on Wednesday morning, Mr Trump's economic adviser Kevin Hassett told reporters at the White House.
Asked if there would be an announcement today, Mr Hassett added: "Well, you might see an announcement about progress or also guidelines of the things that he's thinking after having some, you know, exchanges of views with foreign people today and yesterday."
Mr Trump said on Monday he would announce reciprocal tariffs over the following two days on all countries that impose duties on US goods, and said he was also looking at separate tariffs on cars, semiconductors and pharmaceuticals.
Separately, EU trade ministers were due to meet by video conference to determine their response after European Commission President Ursula von der Leyen said tariff moves against the bloc "will not go unanswered".
Germany's economy ministry said ahead of the meeting that the EU should focus on negotiating to avert a transatlantic trade war, while being ready with countermeasures.
Donald Trump stunned markets on Monday by announcing tariffs on all steel and aluminum imports beginning on 12 March.
The plans drew condemnation from Mexico, Canada and the European Union, while Japan and Australia said they were seeking exemptions from the duties.
The news sent industries reliant on steel and aluminum imports scrambling to offset an expected jump in costs.
Last week, Mr Trump imposed an additional 10% tariff on Chinese goods, effective 4 February, with Chinese countermeasures taking effect this week.
He delayed a 25% tariff on goods from Mexico and Canada for a month until to allow negotiations over steps to secure US borders and halt the flow of the drug fentanyl.
Concerns over higher prices for consumers
Some US workers welcomed Monday's metal tariffs, but many manufacturing-heavy firms expressed deep concern over the next steps, warning the hike would reverberate across supply chains.
Executives from companies including supermarket chain Ahold Delhaize and Siemens Energy warned tariffs would lead to higher prices as they seek to pass on the extra costs of imports.
Europe's steelmakers are also worried that US tariffs will lead to a flood of cheap steel coming into Europe. French steelmaker Aperam urged Brussels to intervene to curb imports if that happened, while Austria's specialty steelmaker voestalpine called on the EU to take immediate countermeasures.
Australia's industry minister, meanwhile, said the nation's plan to boost "green" aluminum exports would not be derailed by the threat of US tariffs.
"The world has a high demand for our aluminum; we need it as part of the transition to net zero," Ed Husic told reporters at the National Press Club in Canberra. "The question is for our American friends do you really want to pay more for that product that you've got a big demand for?"
Economists broadly see tariffs as presenting more upside risk to inflation than not, and ahead of the announcement from the White House the scene around price pressures for American households has taken a turn for the worse.
Bureau of Labor Statistics data released on Wednesday morning showed inflation picked up in January, notching its largest month-over-month gain since August 2023. The increases were across items of daily household consumption, covering everything from gasoline, up 1.8%; to shelter, up 0.4%; to eggs, up 15.2%, the largest increase in nearly a decade.
"It's unclear whether the January CPI will give some in the Trump administration pause about moving forward quickly with some of the proposed tariffs," Ryan Sweet, Chief US Economist at Oxford Economics, wrote after CPI's release.
"Tariffs can still be used as a bargaining tool to get some concessions from other countries, but the political optics of putting even a little upward pressure on consumer prices via tariffs wouldn't be greatfor the Trump administration."
Monumental undertaking
In an interview on Wednesday with CNBC, Mr Trump's trade adviser Peter Navarro
downplayed the negative impact of the expected tariffs, arguing that duties imposed during Trump's first term did not send inflation soaring and export-dependent producer economies often lowered their prices to prevent losing market share.
Trade experts say structuring the reciprocal tariffs that Mr Trump wants poses big challenges for his team.
William Reinsch, senior fellow at the Center for Strategic and International Studies, said Trump officials could opt for a more easily implemented flat 10% or 20% tariff rate, or a messier approach that would require separate tariff schedules matching US tariffs to each other country's rates.
Damon Pike, a trade specialist and principal with the US division of accounting firm BDO International, said the reciprocal tariffs that Mr Trump envisioned would be a monumental undertaking, given that each of the 186 members of the World Customs Organization had different duty rates.
"At the international level, there's something like 5,000 different descriptions at the 6-digit (product subheading) level, so 5,000 times 186 nations. It's almost an artificial intelligence project," he said.
Reinsch said imposing reciprocal tariffs also ceded control of the US tariff schedule to other countries, following whichever tariff rate they set, and could lead to counterproductive results.
"For example, if Colombia has a high tariff on coffee in order to protect its industry, we would put a high tariff on Colombian coffee to match theirs, even though we don’t grow coffee. The only people hurt would be US consumers," he said.
Tánaiste to attend EU trade meeting on US tariffs
Tánaiste and Minister for Foreign Affairs Simon Harris will join an emergency meeting of EU trade ministers via video conference later to respond to US President Donald Trump's imposition of tariffs on European steel and aluminium imports.
European Commission President Ursula von der Leyen has condemned the tariffs and promised "firm and proportionate" countermeasures, although the commission has yet to confirm any retaliatory measures.
EU trade ministers will take stock of President Trump’s executive order to hit all steel and aluminium products entering the US with tariffs, including European steel, some 3.7 million tonnes of which were exported to the US last year.
In the European Parliament yesterday, EU Trade Commissioner Maroš Šefčovič said the commission was still assessing the scope of measures imposed by Mr Trump which, he said, were bad for business, worse for consumers, and harmful to the global trading system.
In a statement, Mr Harris said he agreed with Mr Šefčovič that retaliation should not be the EU’s preferred scenario.
He said his priority was to protect the interests of Irish and European businesses, workers and consumers from unfair tariff measures and avoid escalating tit-for-tat duties.
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Mr Harris said the EU should be looking to strengthen a deeply integrated relationship and not placing further obstacles in the way of trade flows.
After President Trump imposed 25% tariffs on steel and aluminium in his first term, the EU imposed retaliatory tariffs on products like denim, orange juice, bourbon and Harley Davidson motorbikes.
Under a deal with the Biden Administration, those tariffs were suspended.
However, the suspension expires on 1 March at which point the commission could reimpose the tariffs, this time they could double to 50%. That remains an option for the European side.
