The EU, Canada and Mexico are in the tariffs line of fire
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On tariffs, the EU is in the firing line, but the UK is spared for now. Good morning. This is the Marketplace Morning Report and we're live from the BBC World Service. I'm Leanna Byrne.

So we start with the latest escalation in the global trade dispute. The United States has double tariffs on nearly all imported steel and aluminium, jumping from 25% to 50%. The stakes are high though. Around a quarter of all steel and half of all aluminium used in the US is imported. The BBC's Katie Silver has the details. There has been shock amongst American steel and aluminium importers. That is actually going ahead. We've spoken to a number of them, but there are

thoughts that the new tariffs could indeed provoke retaliation from some of America's biggest trading partners. Now, the US, according to White House estimates, is the biggest importer of steel in the world that comes after the European Union, and it sources most of the metal from the likes of Canada, Brazil, Mexico and South Korea.

Now, it was something that this trade deficit was something that President Trump was trying to correct for on his first term in office with tariffs. But the trouble was many nations managed to avoid them by striking bilateral deals. In March, he said that he does not want to see this happen a second time. And therefore, when he made this announcement last week, he said he wanted to make the tariffs so high that 50 percent range.

that US businesses would have no alternative but to buy from American suppliers. So far, it seems the tariffs are reducing imports according to data, but not yet driving up production. So that's going to be one of the big challenges is how you can make steel affordable when you have US costs and US labor costs and all of that.

those sorts of things. That was Katie Silver reporting. But there was a late twist to the story yesterday. The UK will be exempt for now thanks to a bilateral deal signed in May. That deal isn't enforced yet though, so UK steel exporters still face tariffs in the meantime and they could be hit with a full 50% if the agreement falls through. Rowan Crouser is CEO of Brander, a metal stamping specialist in Birmingham. He says the ongoing uncertainty is having a big impact.

Essentially, our customers are less confident in forward planning or ordering what they need. Bear in mind that the types of products we make, whether they're from steel, copper or brass or some other metal, there are long lead times to our supply chain to actually procure the material, bring it into our factory, stamp the product, finish the product and then ship it.

If there's delays or late placement of orders because they need the products, that's not going away. It does make things a little bit more nightmarish for us to actually plan. That was Rowan Crouser, CEO of Brandr. Now, let's do the numbers.

European markets edged higher today with Germany's main index nearing a record high ahead of the country's new tax relief package aimed at boosting growth. But traders are remaining cautious because, as we mentioned, today is the deadline for countries to respond to those U.S. tariffs.

threats. Now let's stick to that story because it is a big week for the EU economy and for its trade relationship with the United States. The European Commission is unveiling its 2026 budget proposal today, setting out things where it wants to spend money on like climate action, defence and economic growth. But all

eyes are also on Washington, where the US has set a deadline for trade partners, including the EU, to put forward their best offer to avoid a new wave of tariffs. Marky Booty is former Director General for Economic and Financial Affairs at the European Commission. Hello. Hello. There is a lot on the line. So do you think the EU is handling these negotiations effectively?

I think the EU is negotiating in good faith. So it decided, for instance, after the 9th of April, on the 14th of April, to pause the tariffs that it had announced and actually agreed on 21 billion of U.S. imports.

But negotiating good faith with the US government is clearly a risky endeavour. Spelling out clearly what is going to happen should the negotiations fail, I think is a must now. Do you think one of the problems is, though, that the US is looking at Europe at the moment and it's seeing a lot of internal challenges? We see Germany's delaying its fiscal plans, France is in political chaos over its budget.

With Europe's fiscal unity fraying, is that a bad position to be in when you're negotiating? That is clearly not a comfortable position, obviously. But the EU, I think at the end of the day, especially when existential challenges are hitting us, manages to find units sometimes in a quite surprising manner. So President Trump thinks that Europe does not have cards,

I think we have a lot of cards to play, but we should be ready to play them all. And if this doesn't work out, what exactly are those cards? I know that Europe is trying to boost defense spending urgently, particularly because of the war in Ukraine, and then also trying to strike deals with other partners like the UAE and India. Could that offset anything that they might lose from the U.S.?

as you mentioned, start to strike deals to rebuild multilateralism bottom-up. So now the U.S. is calling into question Bretton Woods institutions, multilateralism as we know it,

We should build free trade areas, investment agreements, and we have started with Mercosur, with India, Switzerland, Mexico, etc. After all, the U.S. is a key player, but 85% of trade in the world is not with the U.S. And the third one, probably the most difficult one, is to rethink Europe's business and security model.

It takes time, but we have to start travelling because otherwise the long run never comes. Okay, Marco Butti, former Director General for Economic and Financial Affairs at the European Commission. Thank you so much for joining us on Marketplace. Thank you. My pleasure. And finally, it's International Cheese Day. And while France is world famous for its fromage, a new survey by Parisian Cheese Academy finds nearly one in 10 young French adults don't eat cheese at all.

I guess Gen Z just isn't biting. And that's it from the Marketplace Morning Report from the BBC World Service. I'm Leanna Byrne. Thanks for listening.

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