European and Canadian leaders have vowed to challenge Donald Trump’s plans to impose tariffs on their steel and aluminum exports. European Commission President Ursula von der Leyen stated that the move would trigger “firm and proportionate countermeasures,” while Canadian Prime Minister Justin Trudeau pledged to “stand up for” Canadian workers and businesses.

This followed Trump’s announcement of a 25% import tax on all steel and aluminum entering the U.S., ending previous exemptions for allies like Canada and the EU, marking a major expansion of trade barriers. Trump defended the move, saying it would “simplify” rules and boost domestic production, adding, “This is a big deal, the beginning of making America rich again.” He emphasized the need for U.S.-made steel and aluminum, with the new measures set to take effect on March 12.

The U.S. is the world’s largest importer of steel, with Canada, Brazil, and Mexico as its top suppliers. Last year, Canada accounted for over 50% of aluminum imports into the U.S. These tariffs will raise costs for U.S. businesses that rely on imports, sparking concern that it will make selling products in the U.S. more expensive for many companies globally. If the tariffs are enforced as planned, Canada is expected to be hit hardest.

Trudeau called the tariffs “unacceptable,” expressing hope that talks with the Trump administration would resolve the issue without retaliation. However, he warned, “If it comes to that, our response will be firm and clear.” Von der Leyen echoed similar concerns, stating that the EU would respond with countermeasures, emphasizing that tariffs are bad for business and consumers.

Other leaders, including Mexico’s economy minister, criticized the tariffs as unjustified but stopped short of announcing retaliation plans. South Korea’s acting president said the country would work to maintain a strong relationship with the Trump administration.

The announcement saw shares of U.S. steelmakers rise, with Cleveland-Cliffs’ price jumping nearly 20%. Prices for steel and aluminum also climbed, while the Canadian dollar and Mexican peso fell. However, the broader market response was muted, with some questioning whether the tariffs are a negotiation tactic or a serious move by Trump, given his history of delaying or negotiating exemptions.

“This is a replay of 2018,” said Dartmouth College economics professor Douglas Irwin, referring to Trump’s previous tariffs on steel and aluminum. In 2018, Trump imposed 25% tariffs on steel and 15% on aluminum but later negotiated exemptions for countries like Canada and Mexico. Jane Foley of Rabobank suggested that the market is unsure if this is a bargaining tactic or if Trump intends to push the tariffs through.

Last week, Trump also delayed a 25% tariff on Canadian and Mexican products for 30 days and imposed new 10% tariffs on Chinese goods, prompting retaliation from China.

The tariffs are central to Trump’s economic vision, which he believes will protect jobs and boost the U.S. economy by encouraging domestic production. However, there are concerns about rising costs for U.S. manufacturers that depend on steel and aluminum. Industry groups, from construction to can-makers, have warned about the impact.

When asked if tariffs could lead to higher prices for consumers, Trump insisted that they would ultimately lower costs, saying, “It’s time for our great industries to come back to America.” He also suggested that other tariffs could target pharmaceuticals and computer chips.

In his first term, Trump’s tariffs raised the average price of steel and aluminum in the U.S. by 2.4% and 1.6%, respectively, according to the U.S. International Trade Commission. Stephen Moore, an economist and former Trump campaign adviser, argued that the tariffs were not an effective job creation tool but more of a strategy to grab global attention.

Trump officials have indicated that the new measures are aimed at preventing countries like China and Russia from bypassing tariffs by funneling cheap products through other nations. New standards would require steel to be “melted and poured” and aluminum to be “smelted and cast” in North America.

Nick Iacovella, a spokesperson for the Coalition for a Prosperous America, noted that while Canada sends far more goods to the U.S. than it imports, the U.S. still faces trade imbalances with both Canada and Mexico, which Trump has repeatedly criticized. “There are still imbalances with the Canadian and United States trading relationship that should be addressed,” Iacovella said.