Trump's 50% steel tariffs hit the world but UK spared full blow

U.S. tariffs entered the spotlight once again in Europe on Wednesday as U.S. President Donald Trump's 50% levy on steel and aluminum imports to the U.S. came into effect.

Announced last week and signed by Trump on Tuesday, the order doubles tariffs from 25% to 50% on all metals imports to the U.S., with the president stating that the move will protect the U.S. steel industry amid a flood of cheaper foreign steel imports and weaker global demand.

Canada and Mexico are the biggest exporters of steel to the U.S., with other major sources including Brazil and South Korea.

European steel exporters to the U.S., including those in Germany, Italy, Sweden and the Netherlands, will be hard hit by the new 50% levy. The U.K. was granted a temporary reprieve, with a 25% tariff remaining in place while details of Britain's recently signed trade deal with the U.S. are worked out.

Trump stated while signing the steel tariffs order on Tuesday that the U.K. warranted "different treatment" to its European peers due to the "Economic Prosperity Deal" inked on May 8.

The 25% tariff is expected to be removed as part of the trade deal, although Trump warned that it could even increase the levy on the U.K. to 50% "on or after July 9" if the White House "determines that the United Kingdom has not complied with relevant aspects of the EPD."

The U.S. accounts for 7% of the U.K.'s total steel exports, with the trade worth £370 million ($500 million), in 2024, according to UK Steel.

The trade body's Director-General Gareth Stace on Tuesday said that the U.K.'s exemption from the 50% duty was "a welcome pause," but urged London and Washington to turn their trade deal into reality to remove the tariffs completely.

"Continued 25% tariffs will benefit shipments already on the water that we were concerned would fall under a tax hike," he said in a statement.

"However, uncertainty remains over timings and final tariff rates, and now U.S. customers will be dubious over whether they should even risk making U.K. orders," he added, warning that the levies come at "an already crushing time for our steel industry, with global oversupply and weak demand."

Chrysa Glystra, UK Steel's director of Trade and Economics Policy, told CNBC Wednesday that the industry was "very pleased to be waking up to just 25% tariffs, unlike the rest of the world waking up to 50%."

"We recognize this took quite a bit of effort from the UK government, we didn't know until very late last night that this was happening so it's quite a relief," she told CNBC's "Squawk Box Europe."

The European Union is meanwhile fuming about the 50% steel tariff, saying such a move "undermines" its ongoing trade deal negotiations with the U.S.

An EU spokesperson said that the bloc was "prepared to impose countermeasures" although it has not provided further details on what form these could take.

"If no mutually acceptable solution is reached, both existing and additional EU measures will automatically take effect on 14 July — or earlier, if circumstances require," the spokesperson said.

Analysts say Trump's tariffs will force U.S. steel prices upwards, leading to higher prices for both industry, such as automakers, and consumers buying canned food and drink.

But while the inflationary impact on U.S. domestic prices is widely expected to be severe, the effect in Europe will be more mixed, with some buyers and manufacturers able to benefit from lower prices as more steel is redirected to the region, analysts told CNBC this week.