In a stage-managed White House press conference, surrounded by steel workers, US President Donald Trump has signed off on new steel and aluminium trade tariffs that many fear could spark a trade war.

Trump used his executive powers - evoking national security risk - to apply tariffs of 25 per cent on steel and 10 per cent to aluminium but said there would be a 15 day window for nations to make an appeal for exemptions.

He mentioned both Canada and Mexico - US partners in the Nafta trade pact - and Australia, as a valuable ally that would be considered for exemptions.

There was no mention of New Zealand, which exports around $60 million of steel and aluminium to the US each year.


But trade experts fear the biggest risk to New Zealand lies in the fallout if the moves spark a bigger trade war.

Both China and the Europe Union appear to be in Trump's sights and both have indicated they would look to retaliate if they feel the US has broken trade rules.

"A confusing situation just got more confusing and uncertain," said Stephen Jacobi,
executive director, NZ International Business Forum. "This is the worst way to conduct trade policy, it flouts WTO rules. It's not way to put the world on a path to growth."

Jacobi said he hoped that progress could be made in the next 15 days to soften the measures further and that any response from trading partners was handled through the WTO.

Last week the EU indicated it could respond by hiking tariffs on US products like jeans, Harley Davidson Motorcycles and bourbon.

Yesterday Chinese Foreign Minister Wang Yi said that China would take a "justified and necessary" response to new tariffs but said a trade war would only harm both sides.

"There are lots of forces in the US who will rally around this, there are already congressional efforts to overturn this, there's a big group of industries that have come together to advocate for something," Jacobi said.

But New Zealand's Government would have little option but "to attempt to negotiate something" with a view to being included in exemptions.


The announcement came within an hour of the signing off the multilateral CTPP trade deal in Chile, which Jacobi said he doubted was a coincidence.