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Update: Trump plans steep tariffs on steel, aluminum

The U.S. will impose stiff tariffs on steel and aluminum, a prospect that sent stocks lower and raised the specter of a trade war with other major economies.

In a meeting with executives from major U.S. aluminum and steel processors on March 1, President Donald Trump said the U.S. will tax imports of steel at 25% and aluminum imports at 10%, according to a report from the White House press pool. Trump did not say whether the new tariffs would target or exempt imports from any specific countries.

"Pretty much all of you will be immediately expanding if we give you that level playing field," Trump told the executives, who represented companies including U.S. Steel Corp. and Nucor Corp. Trump added that he plans to sign the new tariffs into law next week.

Major equities indexes slumped after Trump outlined the tariffs, but closed off their session lows; the S&P 500 finished down 1.33% at 2,677.67, and the Nasdaq shed 1.27% to end at 7180.56. Shares of steel- and aluminum-focused companies rallied, with U.S. Steel rising shares gained 5.75% to close at $46.01 and Century Aluminum Co. climbed 7.51% to close at $20.48 a share.

Earlier in the day, multiple media reports citing unnamed sources said that Trump was unlikely to announce the tariffs as scheduled, suggesting divisions among administration officials over the move.

Speaking at the White House, U.S. Steel President, CEO and Director David Burritt said the tariffs stand to make U.S. companies more competitive against foreign rivals, adding that he and others who support the higher tariffs "are not protectionists," according to the press pool report.

The European Commission responded late in the day, suggesting that the move could lead to retaliation and strain trans-Atlantic relations. "We will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk," commission President Jean-Claude Juncker said in a statement. "The EU will react firmly and commensurately to defend our interests."

Provided the tariffs take effect, they would be the latest in a series of moves by major economies to roll back key parts of the global trade regime. Since the U.K.'s vote to leave the EU in June 2016, decades-old supply chains and trade relationships have been called into question. In the U.S., Trump has advocated higher tariffs on certain goods and revisions to existing free trade agreements — measures that he claims will bolster American companies and generate more jobs.

In the U.S., President Trump signed off in January on tariffs of 30% on solar panels and cells produced overseas, including in China.

While the White House has said the tariffs will protect U.S. solar manufacturers, industry experts have said they are more likely to hike prices of solar panels for consumers. Some Canadian companies have also filed a lawsuit against the U.S. government, claiming that the move violates the North American Free Trade Agreement.

The Trump administration has embarked a renegotiation of NAFTA itself, but that effort remains unresolved after six rounds of discussions. The president has threatened to scrap the pact if the talks do not produce what he considers a better arrangement.

Trump also approved tariffs of up to 50% on consumer washers in January. The move has created tension between the U.S. and South Korea as LG Electronics Inc. and Samsung Electronics Co Ltd, both companies based in South Korea, sell washers in the U.S.

The Commerce Department recommended on Feb. 16 that the metals tariffs be imposed after conducting a national security review under Section 232 of the Trade Expansion Act of 1962. The agency proposed a tariff of at least 7.7% aluminum imports and 24% on steel.