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Fitch: Global GDP growth likely to withstand most retaliatory tariffs

Trade measures enacted in response to U.S. tariffs on steel and aluminum imports may not pose a major threat to global economic expansion unless the dispute worsens, Fitch Ratings said.

Fitch noted that U.S. imports of iron, steel and aluminum only make up 0.3% of the nation's economic output. "Retaliatory actions could escalate trade tensions but the situation would need to deteriorate severely to have major ramifications for world GDP," the rating agency said.

And until the trade tensions escalate into a trade war, the tariffs will only have a limited immediate impact on U.S. inflation, according to Fitch.

The Trump administration introduced tariffs of 25% on steel and 10% on aluminum imports from the EU, Canada and Mexico last week following the expiration of temporary exemptions. In response, Canada threatened tariffs on C$16.6 billion of U.S. goods, and the EU said it will apply levies on about €2.8 billion of American products including steel. Mexico also targeted U.S. pork, produce and steel imports with its own retaliatory tariffs.

Fitch said the direct impact of the U.S. tariffs on the EU steel and aluminum industries should be limited, since exports to the U.S. represent just 3% of total steel and aluminum output.

Meanwhile, U.S. companies with significant international sales are more exposed to the retaliatory tariffs, Fitch said, citing the likes of distiller Brown-Forman Corp. and motorcycle builder Harley-Davidson Inc. Brown-Forman noted the potential effects of tariffs when it released earnings June 6.