Donald Trump’s ongoing trade conflict is now affecting global markets, with the implementation of 25% tariffs on all steel and aluminium import to the United States starting today. This move is expected to negatively impact UK products, estimated to be worth hundreds of millions of pounds.

The imposition of these duties was first announced in mid-February as investors cheered President Trump‘s ‘America First’ policy, which initially targeted Mexico, Canada, and China.

While two rounds of tariffs on China have been executed, tariffs on some Canadian and most Mexican goods remain in limbo until at least 2 April.

The newly implemented tariffs aim to shield US manufacturing jobs by making products from abroad less competitive.

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These tariffs will likely increase the cost of goods, ranging from cars to soft drink cans – and thus some beverages – rendering them more costly to consumers.

Canada, the US’s largest exporter of both steel and aluminium, saw Trump’s administration withdraw a threat to double tariffs to 50%.

The American tariffs pose a considerable challenge to UK steel exports, which exceed £350 million annually, with the majority of exports being stainless steel.

Business Secretary Jonathan Reynolds expressed his disappointment but stated that the UK government will not immediately retaliate as negotiations over a broader trade agreement with the US continue.

“I will keep engaging with the US closely and productively to advocate for UK business interests,” he assured.

The European Union, on the other hand, has vowed to counter with €26 billion of tariffs on US goods starting 1 April, explicitly leaving open the door for meaningful dialogue with the US. During Mr. Trump’s first term, the bloc had countered similar tariffs by imposing charges on items such as US-made bourbon and jeans, measures that were later suspended.

These duties, the Commission indicated, would be reimposed from April, with further products added to match the value of the US tariff impact.

Industry body UK Steel emphasized it is a trading partner, not a threat, and called upon the government for a response.

Any decrease in demand among US customers will force producers to seek out new markets, although some could be rerouted to domestic projects within the UK.

This steel may become particularly appealing, as China, the world’s leading steel producer, has signaled its intention to limit exports in response to Trump’s tariffs.

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President Trump is under increasing pressure to reconsider, particularly in regards to the trade disputes with neighboring countries like Mexico and Canada. Market fluctuations, influenced by concerns over increased import costs, have already adversely affected the US economy, evident through currency and bond market trends.

The dollar has devalued by about five cents against both the pound and a rebounding euro in just the past few weeks.

Stock markets have also reflected this trend, with the overall market value of the broad S&P 500’s constituent companies having plummeted by more than $4 trillion from the peak seen just last month. The overriding fear is that this protectionism could potentially push the world’s largest economy into a recession, a possibility that Mr. Trump did not deny in a recent interview.

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US firms, already grappling with the complexities of a tariff regime that is continuously expanding, also openly acknowledge the expected damage to their operations. Delta Airlines lowered its first-quarter growth forecast amid the current turmoil, and US firms are facing an increasing number of product boycotts.

Travel bodies have reported a significant drop in the number of Canadians crossing the US border, with road trips downward by nearly a quarter last month compared to February 2023, as per Statistics Canada.