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Likelihood of Global Trade War Increases Following U.S. Rescission of Steel/Aluminium Tariff Exemptions for EU, Canada and Mexico

The United States rescinded on 1 June the exemptions it temporarily provided to the European Union, Canada and Mexico from the additional import duties on steel and aluminium that were imposed as of 23 March. As a result, these trading partners have threatened to retaliate against a broad range of U.S. products within the next few weeks.

The EU has vowed to impose an additional 25 percent duty beginning on 20 June and until the United States lifts its tariffs against EU steel and aluminium products on hundreds of U.S. products, including, among others, various apparel, textile and footwear items, agricultural products, orange juice, bourbon whiskey, tobacco products, cosmetic products, steel and aluminium products, playing cards, sailboats and motorcycles. The EU has also set forth a second group of products on which duties could be increased by up to 50 percent in March 2021 if the U.S. has not rescinded its steel and aluminium tariffs by then.

In a 31 May statement, Mexico’s Ministry of Economy said it will impose countermeasures against various U.S. products, such as flat steel (hot and cold foil, including coated and various tubes), lamps, pork legs and shoulders, sausages and food preparations, apples, grapes, blueberries and various cheeses, among others.

Meanwhile, Canada has announced its intention to impose effective from 1 July an additional duty of 10 percent or 25 percent on C$16.6 billion (about US$12.8 billion) worth of U.S. products. Products under consideration for these measures include various food and agricultural products such as cucumbers, yoghourt, roasted coffee, maple sugar and syrup, strawberry jam, chocolate, orange juice, mustard, and tomato ketchup and other tomato sauces, steel and aluminium products, whiskies, cosmetic and personal care products, dishwashing detergents, candles, plastic tableware and kitchenware, plywood, insecticides, handkerchiefs and toilet paper, mattresses and other bedding articles, playing cards, pens and markers, refrigerator-freezers, washing machines, water heaters, and boats. Comments on the proposed measures are due by 15 June.

Several other countries have also threatened to retaliate against the United States over the steel and aluminium tariffs. For example, Russia has said it would target US$537.6 million worth of U.S. products but indicated that further details on specific goods would be provided later. Turkey has said it would raise duties on 22 U.S. goods, including, rice, tobacco, cosmetics, paper and motor vehicles, worth US$266.5 million. Japan has indicated an intent to target US$264.4 million worth of U.S. goods, but no specifics have been provided. India’s list, meanwhile, reportedly identifies US$165 million worth of mostly agricultural products along with some motor vehicles.

Content provided by Picture: HKTDC Research
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