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U.S. allies hit back over steel and aluminium tariffs

U.S. allies hit back over steel and aluminium tariffs

Canada will impose retaliatory tariffs on C$16.6 billion (£9.6 billion) worth of USA exports and challenge US steel and aluminium tariffs under the North American Free Trade Agreement and the World Trade Organization (WTO), Canadian Foreign Minister Chrystia Freeland said on Thursday.

Freeland says the dollar-for-dollar countermeasures, which apply to a long list of USA products from flat-rolled steel to playing cards and felt-tipped pens, will go into effect July 1.

Prime Minister Justin Trudeau told a news conference the USA tariffs were "totally unacceptable".

Incidentally, this strategy willfully violates USA commitments as a member of the World Trade Organization - so it's illegal as well as counterproductive. "That Canada could be considered a national security threat to the United States is inconceivable".

Canada will also launch challenges of the USA tariffs at the World Trade Organization and through a Nafta panel.

The Trump administration's decision to impose steel and aluminum tariffs against allies Canada and Mexico throws the latest wrench into talks to renegotiate the North American Free Trade Agreement, which started previous year and had already hit roadblocks in May.

Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto spoke by phone after the US announcement.

"We are at a critical moment not only for the future of multilateralism, but for the planet itself", he said in a speech.

The bloc also needs to determine how to deal with the Trump administration now, particularly after he opened an investigation into cars and trucks that could lead to similar tariffs as now on metals.

The Wolfsburg-based company is calling for dialogue between the USA and the European Union within recognized World Trade Organization principles "in order to prevent any long-term economic damage". The US accounts for 90 percent of Canada's steel exports, however.

"And, in the case of the United Kingdom, where we send steel to the United States that is vital for their businesses and their defence industry, it is patently absurd".

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Canada and Mexico, embroiled in talks with the United States to modernise the North American Free Trade Agreement (NAFTA), responded swiftly and German Economy Minister Peter Altmaier said the European Union might team up with them.

And on Thursday, the White House announced the levies have now been imposed on the EU, Mexico and Canada, despite previous exemptions.

Ross, meanwhile, said that he still plans to leave for China on Friday for the resumption of trade talks.

European officials argue that the tariffs, along with retaliatory actions, will hurt growth on both sides of the Atlantic. He justified the tariffs by arguing that U.S. producers are vital to national security and were threatened by a global supply glut.

Peter Altmaier said: "We want open markets, free markets but we have to convince the U.S. administration".

The first shots have been fired in the unexpected trade war between Canada and the United States, but it's not immediately clear who's going to take the most casualties.

Former British trade minister Francis Maude has condemned the United States' decision to impose tariffs on steel and aluminum imports as "stupid" and counterproductive.

It's not as if the USA even has the capacity to fill its own need for steel and aluminum. "They're critical for national security".

But the good news, if there is any, is that Trump may have shot himself in the foot - the trade war is only beginning.

When faced with foreign competitors who are now obligated to raise their prices by 25 per cent, Bradford and others say USA companies will likely match that price hike and pocket the difference.

Germany has tended to favor a more conciliatory approach, while others believe, after weeks of metal tariffs talks, that Trump will only respect a hard line.