Fears of an economic slowdown in the US, as EU responds in kind

Markets have expressed concerns over the implications of US tariffs, as 25% tariffs on aluminium and steel are enforced.

The S&P 500, which tracks the 500 biggest companies in the US, fell to 9.3% as economists lowered their forecasts for S&P 500 and the US economy as whole.

One economist, Peter Tchir head of macro strategy at Academy Securities, was quoted by Bloomberg as saying: “I’m treating this like the Great Financial Crisis [of 2008/9] or European debt crisis.”

He added: “I think we get a chance to have a small bounce, but I’m beginning to think we might have 20% downside from here.”

Robert Budway, CMI president, pointed out trade protectionist measures have had “serious impacts” on the US economy, domestic food security and jobs in the tin mill industry: “Since the 2018 tariffs, America’s tin mill steel producers shut down nine tin mill lines. Today, only three domestic production lines remain open in the United States, meaning American steel producers cannot meet US demand with the highest tinplate steel costs in the world.”

He added that US consumers would be hit hardest facing increased prices for food and beverages. 

As the effects of the tariffs are also beginning to be felt across the Atlantic, EU Commission president Ursula von der Leyen said: “Tariffs are taxes. They are bad for business, and even worse for consumers. These tariffs are disrupting supply chains. They bring uncertainty for the economy.

“Jobs are at stake. Prices will go up. In Europe and in the United States.”

The US tariffs on aluminium and steel will affect approximately EUR26 billion (USD28.3bn) worth of EU exports, according to the Commission.

For the UK, exports of steel to the US are worth GBP388 million, according to the International Steel Statistics Bureau. Some steel company contracts have already been put on hold or cancelled, industry organisation UK Steel has said.

The EU countermeasures will be applied in two stages providing time for a resolution. On 1 April the EU will allow the suspension of existing 2018 and 2020 countermeasures against the US to lapse. This will affect approximately EUR8m-worth of goods from the US. A second round of countermeasures will be imposed by mid-April targeting EUR18bn-worth of US exports to match the scale of US tariffs.

The second round will include industrial products such as steel and aluminium, textiles, leather goods, home appliances, house tools, plastics, and wood products, as well as agricultural products like poultry, beef, certain seafood, nuts, eggs, dairy, sugar and vegetables, according to the Commission.

EU Trade Commissioner Maroš Šefčovič will reopen talks to resolve the issue with Washington.