Policy Risk Monitor – March 14, 2025

A weekly news scan of key policy areas to help firms identify and monitor policy risks.

Mar 14, 2025

Key Policy Developments

Steel and Aluminum Tariffs Take Effect, Spark Retaliation

President Donald Trump’s 25% tariffs on all U.S. imports of steel and aluminum took effect March 12, 2025, increasing tensions in a global trade war. The tariffs were imposed on all countries without any exemptions. Several countries issued immediate responses, as trade tensions increased.

The EU responded with plans to impose tariffs on up to €26 billion ($28.3 billion) in U.S. goods. The EU announced retaliatory tariffs in two stages. On April 1, it would reimpose tariffs, in response to €8 billion in U.S. tariffs, that would cover such goods as Harley-Davidson motorcycles, bourbon, and jeans. In mid-April, it will impose new U.S. tariffs of more than €18 billion. Trump said the United States would respond to the EU countermeasures and threatened tariffs of 200% on EU wine, champaign, and alcoholic beverages.

Canada

Canada announced 25% tariffs on C$30 billion ($20.8 billion) of U.S. goods, targeting steel and aluminum as well as other consumer items to match the new U.S. tariffs “dollar for dollar.” Canada’s central bank cut interest rates to the lowest level since 2022, the FT reported, warning that a trade war could reduce economic growth and increase inflation. Incoming Canadian prime minister Mark Carney said these are “dark days brought on by a country we can no longer trust.”

Ontario, Canada Premier Doug Ford imposed a 25% charge on electricity exports to the United States in response to the tariffs. In response, Trump threatened to double tariffs on Canadian steel and aluminum to 50%. Both sides quickly pulled back, as Ford paused the tax on electricity and Trump said he would not double the tariffs.

Mexico

Mexico is waiting to respond until Trump decides whether to impose 25% tariffs on all Mexican imports in response to illegal immigration and fentanyl trafficking. These tariffs for USMCA products are on hold until April 2, when U.S. reciprocal tariffs take effect. Mexican President Claudia Sheinbaum believes Trump will not impose reciprocal tariffs on Mexico.

China

China did not immediately impose retaliatory tariffs but said it would take “all necessary measures” to protect its interests in response to the U.S. tariffs on steel and aluminum imports. China’s foreign ministry said the U.S. actions “seriously violate (World Trade Organization) rules (and) seriously damage the rules-based multilateral trading system.” China’s previously announced tariffs of up to 15% on U.S. agricultural goods took effect March 10.

Other countries

South Korea, Taiwan, Japan, and Australia did not respond. The UK and Brazil both stated that they would seek a broader economic agreement with the United States.

Congress Reaches Deal on CR to Avoid Government Shutdown

Congress passed a spending bill to fund government operations through the end of September, avoiding a government shutdown in the first major legislative victory for Republicans. The bill increases defense spending and cuts approximately $13 billion in non-defense programs from the budget. The bill passed largely along party lines, with the Senate passing the bill only hours before the Friday-night deadline. The House passed the legislation on Tuesday. Speaker of the House Mike Johnson advanced the bill to force Democrats to oppose it and be responsible for a government shutdown that would begin Saturday.

The House passed the bill in a 217-213 vote, with Rep. Thomas Massie of Kentucky as the only Republican who voted against it and Rep. Jared Golden of Maine as the only Democrat who voted for it. The bill passed the Senate on a 54-46 vote, with nine Democrats and independent Sen. Angus King voting to limit debate on the measure and allowing Republicans to overcome the 60-vote filibuster threshold.

Emerging Policy Issues

Tax

SALT Increase Gets Boost From House Freedom Caucus Leader, Bloomberg, March 10, 2025
Senate Finance Republicans to huddle with Trump on taxes, Politico, March 12, 2025
US Says Will Retaliate If Poland Introduces Tax on Big Tech, Bloomberg, March 10, 2025
Tariff Worry on Wall Street Pressures Trump to Speed Up Tax Cuts, Bloomberg, March 11, 2025
Senate Republicans give House’s debt ceiling plan cold shoulder, Semafor, March 12, 2025

Trade

Aluminum and steel

Lutnick Says Trump Sticking to US Aluminum-Steel Tariff Timeline, Bloomberg, March 9, 2025

China

China Imposes Retaliatory Tariffs on Canada Rapeseed Oil, Pork, Bloomberg, March 8, 2025
China slaps tit-for-tat tariffs on $22 billion of US farm goods, Semafor, March 10, 2025
US-China Tariff Talks Stuck at Lower Levels, Stoking Frustration, Bloomberg, March 11, 2025
China vows 'all necessary measures' in response to US steel tariffs, AFP, March 11, 2025

Other

India Signals Readiness to Make Deeper Tariff Cuts, Trump Says, Bloomberg, March 8, 2025
Japan’s Muto Reiterates Plea for Exemption From Trump Tariffs, Bloomberg, March 10, 2025
Peru Prepares US Delegation in Bid to Avert Copper Tariffs, Bloomberg, March 10, 2025
UK Pushes for Last-Minute Exemption From Trump Steel Tariffs, Bloomberg, March 11, 2025
US Lambasts Japan’s ‘700% Rice Tariff,’ Hinting at Levy Target, Bloomberg, March 12, 2025
Trump Criticizes Ireland Over ‘Massive’ Trade Imbalances, Bloomberg, March 12, 2025