United States President Donald Trump on Thursday signed an order imposing a 25% tariff on steel imports and a 10% tariff on imported aluminium. The president’s decision, announced last week, has caused stock markets around the world to decline as he talked of a potential global trade war.

The United States cited Section 232(b) of its Trade Expansion Act, 1962, to levy hefty tariffs to protect American steel producers. This provision of the law gives the US commerce secretary the right to investigate whether certain imports pose a threat to national security.

“The secretary found that the present quantities of aluminium imports and the circumstances of global excess capacity for producing aluminium are weakening our internal economy, leaving the United States almost totally reliant on foreign producers of primary aluminium and at risk of becoming completely reliant on foreign producers of high-purity aluminium that is essential for key military and commercial systems,” Trump said in his declaration.


The president, however, left allies with the scope to renegotiate, saying that countries with which the US has security cooperation are welcome to discuss “alternative ways” to address the problem. “Should the United States and any such country arrive at a satisfactory alternative means to address the threat to the [US] national security...I may remove or modify the restriction...and, if necessary, make any corresponding adjustments to the tariff,” Trump said.

Many in the president’s own Republican Party have opposed the decision, the BBC reported. Republican Senator Jeff Flake – a prominent Trump critic – said he was drafting legislation to nullify the tariffs. Trade wars, he added, are only lost. House Speaker Paul Ryan, one of the senior-most Republicans in the Congress, also said he disagreed with the president’s action and was wary of its unintended consequences.

US allies in Europe, too, expressed their fears about Trump’s decision. European Union’s Trade Commissioner Cecilia Malmstroem urged the president to exclude the bloc from the tariffs. “I will seek more clarity on this issue in the days to come,” she said on Twitter. “Looking forward to meeting US Trade Representative [Robert] Lighthizer in Brussels on Saturday to discuss.”

The British government also said it would work with other EU countries to consider “the scope for exemptions” while “robustly” supporting UK industries”. Britain’s secretary of state for trade told BBC that the US was approaching the problems in the steel industry in the wrong way. “It is doubly absurd that we should be caught in an investigation in national security,” said Liam Fox.

India’s Commerce Secretary Rita Teaotia said there has been a “disquiet” after Trump’s announcement. Teaotia said the move will affect India as it is an exporter, but added that India will wait to see an official US notification on the announcement to gauge its impact.

Last week, India’s Steel Secretary Aruna Sharma had said that Trump’s decision would not have any immediate impact on India as the country exports only 2% of its steel to the US. She, however, questioned the validity of using Section 232(b) to protect American steel workers.