Donald Trump’s trade advisors were finalizing plans on Wednesday for the reciprocal tariffs that the U.S. president has pledged to implement against any country imposing duties on American imports, escalating concerns about a potential global trade conflict.

In a separate development, trade ministers from the 27-member European Union were scheduled to convene later via videoconference to discuss their strategy in response to European Commission President Ursula von der Leyen’s statement that any tariff actions against the EU “will not go unanswered.”

Trump’s announcement on Monday to impose tariffs on all steel and aluminum imports starting March 12 took markets by surprise. This decision faced backlash from Mexico, Canada, and the European Union, while Japan and Australia expressed intentions to seek exemptions from the tariffs.

The announcement prompted industries dependent on steel and aluminum imports to take urgent measures to mitigate anticipated cost increases. Last week, Trump also enacted an additional 10% tariff on Chinese goods, effective February 4, with Chinese retaliatory measures set to commence this week.

He postponed a 25% tariff on products from Mexico and Canada for one month, until March 4, to facilitate negotiations aimed at securing U.S. borders and curbing the flow of fentanyl. While some U.S. workers supported the metal tariffs introduced on Monday, many manufacturing firms voiced significant concerns about the implications of these tariff increases, warning that they would disrupt supply chains and impact all businesses reliant on these materials.

Executives from various companies, including the supermarket chain Ahold Delhaize and Siemens Energy, have expressed concerns that tariffs will result in increased prices as they attempt to transfer the additional costs of imports to consumers. European steel manufacturers are also apprehensive that U.S. tariffs could lead to an influx of inexpensive steel into Europe. French steel producer Aperam has called on Brussels to take action to limit imports if this scenario occurs, while Austria’s specialty steelmaker voestalpine has urged the EU to implement immediate countermeasures.

In Australia, the industry minister has stated that the country’s initiative to enhance “green” aluminum exports will not be hindered by the potential imposition of U.S. tariffs. “There is a significant global demand for our aluminum; it is essential for the transition to net zero,” Ed Husic remarked to reporters at the National Press Club in Canberra. “The real question for our American counterparts is whether they are willing to pay more for a product they need so much.”

SIGNIFICANT CHALLENGE

White House officials have remained discreet regarding the details and timing of the upcoming tariffs, with one insider suggesting that an announcement could be made later this week. On Monday, Trump indicated that he would unveil reciprocal tariffs within the next two days targeting all nations that impose duties on U.S. goods, and he is also considering separate tariffs on automobiles, semiconductors, and pharmaceuticals. Trade analysts note that devising the reciprocal tariffs Trump envisions presents considerable difficulties for his administration, which may clarify why the latest duties were not revealed on Tuesday.

William Reinsch, a senior fellow at the Center for Strategic and International Studies, indicated that officials in the Trump administration might consider implementing a straightforward flat tariff rate of either 10% or 20%. Alternatively, they could pursue a more complex strategy that would necessitate creating distinct tariff schedules to align U.S. tariffs with those of other countries. A source monitoring the tariff developments mentioned that discussions were still ongoing as of late Tuesday.

Damon Pike, a trade expert and principal at BDO International’s U.S. division, noted that the reciprocal tariffs envisioned by Trump would represent a significant challenge, as each of the 186 members of the World Customs Organization has its own unique duty rates. “At the international level, there are approximately 5,000 different classifications at the 6-digit product subheading level, which translates to 5,000 multiplied by 186 nations. It’s akin to an artificial intelligence project,” he remarked.

Additionally, Trump could invoke the International Emergency Economic Powers Act, which was previously used to justify tariffs on China and those proposed for Canada and Mexico. “Without IEEPA, some form of agency action would be required before any trade remedy tariffs could be enacted… but everything appears to be moving quickly,” Pike stated, noting that typically, tariff decisions would fall under congressional authority.

Reinsch cautioned that implementing reciprocal tariffs would effectively transfer control of the U.S. tariff schedule to other nations, compelling the U.S. to follow their established rates, which could yield counterproductive outcomes. “For instance, if Colombia imposes a high tariff on coffee to protect its domestic industry, we would then impose a similar high tariff on Colombian coffee, despite the fact that we do not produce coffee ourselves. The primary victims of this would be U.S. consumers,” he explained.