European markets edged higher on Wednesday morning as the EU took swift action against the newly implemented US tariffs on steel and aluminium. The move, which removes all country exemptions, signals rising tensions with key trading partners and introduces a new phase in global trade dynamics.
The US decision to impose a 25% tariff on steel and aluminium will extend beyond metals, affecting American textiles, leather goods, household tools, home appliances, plastics, and wood. Additionally, agricultural exports such as poultry, beef, seafood, nuts, eggs, sugar, and vegetables will face higher costs, further straining transatlantic trade relations.
In response, the European Commission announced immediate countermeasures, confirming that it will impose tariffs on €26bn ($28bn) worth of US goods starting next month. European Commission President Ursula von der Leyen condemned the move, calling it an “unjustified trade restriction” and stating that Brussels would take decisive retaliatory steps. However, she emphasised that the EU remains open to dialogue, assigning Trade Commissioner Maros Sefcovic the task of exploring alternative solutions with the US.
The United States holds significant weight in the European steel market, accounting for 16% of the bloc’s total steel exports. As a result, these trade measures are expected to have far-reaching consequences for industries across both continents.
The UK, on the other hand, opted not to impose retaliatory tariffs, as it continues to prioritise negotiations for a broader economic agreement with the US. While industry leaders urge the government to act decisively, the UK remains committed to diplomatic resolutions in hopes of securing long-term trade benefits.
With escalating trade tensions shaping global markets, investors are closely watching how negotiations unfold, particularly in key industries affected by the new levies. As economic agreements and countermeasures take shape, the next steps from both the EU and the US will be critical in determining the broader impact on international trade and market stability.
The European Commission remains steadfast in its position, preparing to defend its industries while keeping doors open for negotiations. As economic diplomacy takes centre stage, market participants will be weighing the risks and opportunities in an increasingly complex trade landscape.
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