The Trump administration's announcement it will impose tariffs on steel and aluminium imports from Europe, Mexico and Canada has drawn swift vows of retaliation from key allies, inflaming trade tensions and sending stock markets sinking.

Key points: Emmanuel Macron says the US decision is "not only unlawful but it is a mistake"

Emmanuel Macron says the US decision is "not only unlawful but it is a mistake" Mexico says it will penalise US imports including flat steel

Mexico says it will penalise US imports including flat steel Canada will pursue retaliatory penalties on a range of US goods

The administration's move threatens to inflate prices for US consumers and companies and heighten uncertainty for businesses and investors across the globe.

Commerce Secretary Wilbur Ross said the tariffs — 25 per cent on imported steel and 10 per cent on aluminium — would take effect on Friday (local time).

In imposing them, the administration is following through on a pledge to do so after having earlier granted exemptions to the affected nations to try to buy time for negotiations.

The US tariffs coincide with and could complicate the Trump administration's separate fight over Beijing's strong-arm tactics to overtake US technological supremacy and negotiations to rewrite the North American Free Trade Agreement.

President Donald Trump had announced the tariffs in March, saying they were necessary to protect the United States from unfair competition and thereby bolster national security.

The administration has argued that foreign production of steel and aluminium has driven down prices and hurt US producers, creating what the Commerce Department has called a national security threat.

But in targeting its own allies, the US tariffs will widen a rift with normally friendly trading partners, and the likely result of actions and counteractions is likely to be higher costs and reduced access to key goods and materials.

European Commission's president Jean-Claude Juncker said Mr Trump's action amounted to trade protectionism and Europe would respond with countermeasures.

Macron slams US tariffs as 'illegal' and 'a mistake'

Emmanuel Macron said he would talk to Donald Trump on the subject. ( Reuters: Thomas Samson )

French President Emmanuel Macron said the decision to impose tariffs on European metals exports was "not only unlawful but it is a mistake" which could close the door on discussions about other issues.

"Economic nationalism leads to war," Mr Macron said, adding he would talk to Mr Trump on the subject.

Canadian Prime Minister Justin Trudeau said: "These tariffs are totally unacceptable."

He said Canada would pursue retaliatory penalties on a range of US goods.

Mexico said it would penalise US imports including pork bellies, apples, grapes, cheeses and flat steel.

The tariffs represented the latest tactic in Mr Trump's "America First" agenda, which has unnerved traders and investors and raised the spectre of a trade war involving the US and China — the world's two largest economies — as well as other key nations.

The trade actions have also opened the US to criticism that it was burning bridges just as Mr Trump was seeking to rid North Korea of nuclear weapons and help stabilise the Middle East.

Mr Ross said talks with Canada and Mexico over revising NAFTA were "taking longer than we had hoped".

Negotiations with Europe had "made some progress" but not enough for additional exemptions, the commerce secretary said in a conference call from Paris.

"We continue to be quite willing and indeed eager to have further discussions," Mr Ross said.

He said he would travel to China on Friday for trade talks this weekend.

Tariffs could hurt both sides of the Atlantic, EU officials warn

European officials, bracing for the tariffs, have threatened to retaliate against US orange juice, peanut butter, kitchenware, clothing and footwear, washing machines, textiles, whiskey, motorcycles, boats and batteries.

The EU will decide exact countermeasures in coming weeks, according to the French officials.

The EU said it would take action through the World Trade Organisation, setting in motion a process aimed at settling the dispute over the penalties.

The EU move could heighten pressure on Washington. But the process typically takes many months and in some cases, years.

Mr Ross said there was "no longer a very precise date when they might be concluded and therefore (Canada and Mexico) were added into the list of those who will bear tariffs".

Brazil, Argentina and Australia have agreed to limit steel shipments to the US in exchange for being spared the tariffs, the Commerce Department said. Tariffs will remain on imports from Japan.

European officials argue the tariffs, along with retaliatory actions, will hurt growth on both sides of the Atlantic.

German Chancellor Angela Merkel stressed her opposition even before the US announcement, saying the looming tariffs were incompatible with WTO rules.

She said if there were no exemptions, "We will respond in an intelligent, decisive and joint way."

AP/Reuters