globeinfo.live

Ursula von der Leyen, head of the European Commission

“The European Union and Canada announced retaliatory tariffs on Wednesday after the Trump administration’s metals duties went into effect, broadening a trade war with several of America’s top trading partners, reports Good Morning America:

The U.S. at midnight began imposing 25% tariffs on all steel and aluminum imports from all trading partners, with no exceptions…Global trade tensions rattled U.S. stocks. The Dow Jones Industrial Average fell 330 points, or 0.8%, while the S&P 500 dropped 0.25%. The tech-heavy Nasdaq ticked up 0.25%.

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,” the President of the European Commission said. “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 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.

U.S. tariffs on aluminum are dumb, because the U.S. doesn’t even have the electricity to expand its aluminum production to cover producing most of the aluminum it currently imports. As Cato Institute economist Scott Lincicome explains, “On shoring all Canadian aluminum would require ‘over 40 million megawatt-hours of electricity. This is nearly four and a half times the annual electricity production of the Hoover Dam, enough to power 460 data centers or the entire state of Nevada for a year.’” So these aluminum tariffs aren’t going to result in America producing most of its own aluminum. Instead, they will raise aluminum prices.

Canada can produce aluminum more cheaply because it has cheap hydro power. “Canadian aluminum producers have the lowest carbon footprint among major producers, thanks largely to their reliance on hydroelectricity and cutting-edge technologies.” “Canada is the world’s fourth-largest primary aluminum producer, following China, India, and Russia.”

As Quora notes, “Generally speaking, Canada tends to have lower average electricity prices compared to the USA….Canada relies heavily on hydroelectric power, which is often cheaper and more environmentally friendly than fossil fuels. Provinces like Quebec and British Columbia have some of the lowest rates in North America….As of 2023, the average residential electricity price in Canada was about CAD 0.13 per kWh, while in the USA, it was approximately USD 0.15 per kWh.”

Tariffs make aluminum and steel more expensive, which harm U.S. industries that use aluminum and steel. Past tariffs on steel and aluminum “resulted in 75,000 fewer manufacturing jobs in firms where steel or aluminum are an input into production,” note two economics professors, by subjecting those firms to “increased costs of inputs” that made their products less competitive. That is far more than the paltry number of jobs gained in the U.S. steel industry due to tariffs on steel, only about “1,000 jobs.”