President Donald Trump made a surprise announcement on Thursday that there are going to be new tariffs on steel and aluminum coming in the near future.
Before we go on, a quick Econ 101 refresher: A tariff is like a tax, but applied to goods as they enter a country. In theory, this encourages domestic production and consumption.
That, in turn, makes domestic manufacturers — like the ones Trump met with Thursday in what was said to be a hastily arranged
meeting — quite happy.
The tariffs, Trump said, would be coming to him for signature sometime next week and would be sizable — a 25% tariff on steel and 10% on aluminum.
But the news that new tariffs were coming left a lot of other countries and companies...less than pleased, shall we say.
And the worry is that countries affected by the tariffs would then enact their own tariffs on US exports in retaliation, potentially spiraling into an all-out trade war.
Within hours of Trump's announcement, Canadian Foreign Minister Chrystia Freeland issued a fiery statement, warning that any restrictions on Canada's steel and aluminum would be "absolutely unacceptable."
The United Kingdom's statement was a bit less intense, but still not onboard with the US's position.
The EU on Friday threatened to pull the trigger on tariffs on imports of US bourbon, blue jeans, and Harley-Davidson motorcycles in response.
The announcement also potentially disrupted efforts to hold off a trade war with China, whose companies will be hit hard by the tariffs.
On the corporate side, US beer maker MillerCoors issued a statement Thursday condemning the move and warning that jobs could be lost as a result.
And on Friday after Commerce Secretary Wilbur Ross held up a can of Campbell's soup on CNBC to defend the tariffs, the soup company struck back.
The stock market also reacted poorly to the announcement, plunging 500 points within hours of the White House meeting.
Trump may not even be able to count on his party for support, with several Republicans — including Sen. Ben Sasse and Speaker of the House Paul Ryan — coming out against the measure.
Like we said at the beginning, the policy is still in the process of being crafted, which makes it hard to predict exactly what the results on the US economy will be if it's put into place. But based on the reaction so far, other countries aren't going to let it slide — and that's probably not great for the US.