President Donald Trump's trade wars continue as the European Union and Canada announced retaliatory tariffs on Wednesday once the American administration's duties on steel and aluminum went into effect. Tariffs have long been debated in the economic sphere for its effects on consumers and public relations, but what do experts make of the current tensions?
Tariffs generally aim to help U.S. companies compete more effectively with foreign industries by making it more expensive for companies to source products from overseas. U.S. products look more favorable, thereby lending support to domestic industry and jobs.
The Trump administration has promised that tariffs will create jobs for Americans. But economists do not think it is so simple.
"It costs Americans jobs," Mark Zandi, chief economist of Moody's, told CNBC. He categorized tariffs imposed broadly as a "lose-lose." "There are no winners here in the trade war we're seemingly being engulfed in," he continued.
At the same time, while these duties may "relieve" struggling U.S. industries, it comes with a cost, Lydia Cox, an assistant economics professor at the University of Wisconsin-Madison and international trade expert, wrote in a 2022 paper. Tariffs create higher input costs for other industries, making them "vulnerable" to foreign competition, Cox wrote. These spillover effects hurt other sectors of the economy, ultimately costing jobs.
The U.S. began imposing 25% tariffs on all steel and aluminum imports from all trading partners at midnight on Wednesday with no exceptions or exemptions, the White House said. In response, officials representing the European Union said member states would place countermeasures on some 26 billion euros, or about $28 billion, worth of U.S. goods.
"Tariffs are taxes. They are bad for business, and even worse for consumers," said president of the European Commission, Ursula von der Leyen, in a statement. "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."
Canada followed the trend by announcing tariffs on about 29.8 billion Canadian dollars, or about $20.7 billion, in U.S. goods expected to be imported, government officials said. The U.S. imports more steel and aluminum from Canada than any other country.
"Our sole focus is to stand up for Canada interests, Canadian jobs and Canadian workers," Dominic LeBlanc, minister of Intergovernmental Affairs of Canada, said in a press conference in Ottawa.
The new tariffs come as new reports released Wednesday show U.S. inflation slowed last month for the first time since September and a measure of underlying inflation fell to a four-year low.
"[The reports are] encouraging news, though it doesn't tell us much about where inflation is headed," said Oren Klachkin, Nationwide Financial Markets economists, in an email to The Associated Press. "With tariffs possibly set to push goods prices higher... we see inflation risks as titled to the upside."
But tariffs are not only raising economists' eyebrows. In fact, businesses, who are scrambling to keep up with the latest trade war developments, are also starting to feel the effects of these policies.
"It does put a lot of businesses like ours in a tough spot," said Ethan Frisch, co-CEO of the New York spice company Burlap & Barrel. "We're going to have to pass along (the cost) to the consumer. We can't afford to eat that cost ourselves as a small business. And we certainly can't pass it back to a farmer in central Mexico. So, it's going to make the product more expensive, which is then in turn going to slow down sales."
© 2025 Latin Times. All rights reserved. Do not reproduce without permission.
