WASHINGTON, Feb 10 (Reuters) - President Donald Trumpis expected to sign an executive order on tariffs later on Monday or Tuesday, according to a source familiar with the situation, in a move that could increase the risk of a multi-front trade war.
Trump said Sunday he would impose a 25% tariff increaseon all steel and aluminium imports into the U.S. on top of existing duties and a further set of reciprocal tariffs later in the week, drawing warnings of retaliation from trade partners.
Details of the order Trump is due to sign were not immediately available.
Trump has also said he will impose broader reciprocal tariffs this week to match those of countries importing U.S. goods.
Shares in U.S. steel and aluminium makers jumped, while shares in European and Asian steelmakers fell. The largest sources of U.S. steel imports are Brazil, Canada and Mexico, followed by South Korea and Vietnam, according to government and industry data.
Canada, whose extensive hydropower resources aid its metal production, accounted for 79% of U.S. primary aluminium imports in the first 11 months of 2024.
U.S. trade partners warned the new barriers would hurt U.S. automakers, shipbuilders and other industries.
"Australian steel and aluminium are creating thousands of good-paying American jobs, and are key for our shared defence interests," Australian Trade Minister Don Farrell said.
U.S. distillers warned that the steel tariffs could prompt the EU to raise duties on American whiskey.
“A 50% tariff on America's native spirit will have a catastrophic outcome for the 3,000 small distilleries across the United States,” said Chris Swonger, CEO of the Distilled Spirits Council of the United States.
The European Commission said it saw no justification for the tariffs and said President Ursula von der Leyen would meet U.S. Vice President JD Vance in Paris on Tuesday during an AI summit.
In South Korea, the Industry Ministry called in steelmakers to discuss how to minimise the impact of tariffs.
During his first four-year term from 2017, Trump imposed tariffs of 25% on steel and 10% on aluminium.
But he later granted several countries exemptions, including Canada, Mexico and Australia, and struck duty-free quota deals for Brazil, South Korea and Argentina based on pre-tariff volumes. His successor Joe Biden later negotiated similar duty-free quotas for Britain, Japan and the EU.
U.S. steel mill capacity usage jumped above 80% in 2019 after Trump's initial tariffs, but has since fallen as China's global dominance - unaffected by its exclusion by tariffs from the U.S. market - has pushed down prices. One aluminum smelter in Missouri that had been revived by those tariffs was idled last year by Magnitude 7 Metals.
Kevin Dempsey, head of the American Iron and Steel Institute, said the trade group would work with Trump to address "foreign market-distorting policies."
The United States is the second largest importer of steel worldwide, according to U.S. International Trade Administration data, having imported more than 25 million metric tons of steel in 2023. More than half came from three countries: Canada, which accounts for one-quarter of US imports, Brazil, and Mexico.
RECIPROCAL TARIFFS
Trump also has promised detailed information on Tuesday or Wednesday on his reciprocal tariff plan.
The president has long complained about the EU's 10% tariff on auto imports, much higher than the U.S. car rate of 2.5%. However, the U.S. applies a 25% tariff on pickup trucks, a vital source of profit for Detroit automakers like General Motors (GM.N), opens new tab.
Overall, the U.S. trade-weighted average tariff rate is about 2.2%, according to World Trade Organization data, compared to 12% for India, 6.7% for Brazil, 5.1% for Vietnam and 2.7% for the EU.
Indian Prime Minister Narendra Modi is preparing tariff cuts ahead of a Wednesday meeting with Trump that could boost American exports, Indian government officials said. Trump has previously called India a "very big abuser" on trade, and his top economic adviser Kevin Hassett singled out the country as having "enormously high" tariffs in a CNBC interview.
Trump also said the U.S. government would not allow Japan's Nippon Steel (5401.T), opens new tab to take a majority stake in U.S. Steel (X.N), opens new tab. Nippon Steel declined to comment, but Japan's Chief Cabinet Secretary Yoshimasa Hayashi said the company was considering a bold change in plan.
Trump had already threatened to impose tariffs of 25% on all imports from America's two largest trading partners, Canada and Mexico, saying they must do more to halt the flow of drugs and migrants across the U.S. border. After some border security concessions, Trump paused the tariffs until March 1.
Reporting by Andrea Shalal, Jeff Mason and David Lawder; Writing by Andy Sullivan, David Lawder and Kevin Liffey; Additional reporting by Lidia Kelly in Melbourne, David Ljunggren and Costas Pitas; Editing by Barbara Lewis, Sharon Singleton and Nick Zieminski
