The US government will impose tariffs on aluminium and steel imports from the European Union, Canada and Mexico starting Friday.
The decision follows two months of negotiation which had ended with a lack of progress, according to the US Commerce Secretary, Wilbur Ross.
Experts believe these steel tariffs may not have a direct impact on an emerging economy like Bangladesh in the short run, but the escalating tit-for-tat is potentially a lose-lose outcome for the global economy.
The announcement has drawn strong criticism from key US allies and raised the possibility of a spiraling trade war.
The European Union has said it will slap tariffs of its own which could go into effect in the next few weeks.
President of the European Commission, Jean-Claude Juncker said: “I am concerned by this decision. The EU believes these unilateral US tariffs are unjustified and at odds with World Trade Organisation rules. This is protectionism, pure and simple.”
Mexico, too, has said it will target several US products and the amount will be comparable to the level of damage inflicted by US tariffs.
The US tariffs, first announced earlier in the spring, will place a 10 per cent levy on aluminium imports and a 25 per cent on Steel.
Canada and Mexico had previously been granted temporary exemptions as US officials sought to negotiate a new version of the North American Free Trade Agreement or NAFTA.
“Those talks have been taking longer than we had hoped,” said Ross.
He did keep the doors open for further negotiations.
“The fact that we took tariff action does not mean there cannot be negotiation,” Ross said, adding, “We continue to be quite willing and indeed eager to have further discussions with all of those parties,”.
The top five steel exporters to the US are Canada, South Korea, Mexico, Brazil and China.
The announcement led to rise in stocks of American steel and aluminium companies, but the wider market went down because of trade war fears.