US President Donald Trump’s proposed tariffs on steel and aluminium imports are a “black day” for the world and could hurt the Australian economy, according to BHP Billiton chief executive Andrew Mackenzie.

But Mr Trump has insisted he is “not backing down” on his plan to impose stiff tariffs on imported steel and aluminium, despite anxious warnings from House Speaker Paul Ryan and other congressional Republicans of a possible trade war.

Mr Mackenzie said it is too early to tell how the tariffs, which are aimed at protecting US producers, will affect BHP, but he said he is concerned the restrictions could damage the current optimism toward free trade.

“Outside of the US the sense that I have at the moment is that people are re-embracing free trade after a bit of a wobble – partly driven by the result of several elections,” he told a business conference in Sydney.

“I don’t see that changing anytime soon but I am worried about this sort of sentiment shift, that people all around the world might suddenly say free trade is not good for the world, and that would be particularly bad for a trading company like BHP and a trading nation like Australia.”

Despite the uncertainty created by the tariffs, the BHP boss still believes the global economy is in its best shape in eight years.

“In spite of recent moves made by the United States to impose tariffs on steel and aluminium products – a black day for the world and business – elsewhere we do observe buoyant economic conditions underpinned by the growth of free trade outside the US,” Mr Mackenzie said.

We see the world economy in probably the strongest shape it has been since 2010.”

Mr Mackenzie said free trade was the “lifeblood and promoter of health” of the global economy, and he expects it to flourish despite the recent developments in the US.

“We [BHP] will live and die by what happens with free trade,” he said. “We will never hide or seek to hide behind trade barriers to shield ourselves from our lack of competitiveness.

“We will always look forward to competing to win on level playing fields around the world because that will make us stronger.”

Mr Trump has said North American neighbours Canada and Mexico would not get any relief from his plan to place the tariffs on the imports, but suggested he might be willing to exempt the two longstanding allies if they agreed to better terms for the North American Free Trade Agreement (NAFTA).

“We’ve had a very bad deal with Mexico, we’ve had a very bad deal with Canada — it’s called NAFTA,” said.

To protect our Country we must protect American Steel! #AMERICA FIRST

— Donald J. Trump (@realDonaldTrump) March 5, 2018

The President opened the door to exempting the two countries from the planned tariffs, telling reporters, “that would be, I would imagine, one of the points that we’ll negotiate”.

But he added: “If they aren’t going to make a fair NAFTA deal, we’re just going to leave it this way.”

Mr Trump spoke shortly after a spokeswoman for Mr Ryan said the GOP leader was “extremely worried” about the tariffs setting off a trade war and had urged the White House “to not advance with this plan”.

Republican leaders of the House Ways and Means Committee, meanwhile, circulated a letter opposing Mr Trump’s tariff plan.

The administration says the tariffs are necessary to preserve the American industries – and that imposing them is a national security imperative.

The latest round of a nearly year-long NAFTA renegotiation effort is concluding this week in Mexico City and Mr Trump’s comments and tweets earlier in the day suggested he was also using them as leverage in the current talks.

We have large trade deficits with Mexico and Canada. NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A. Massive relocation of companies & jobs. Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed. Also, Canada must..

— Donald J. Trump (@realDonaldTrump) March 5, 2018

…treat our farmers much better. Highly restrictive. Mexico must do much more on stopping drugs from pouring into the U.S. They have not done what needs to be done. Millions of people addicted and dying.

— Donald J. Trump (@realDonaldTrump) March 5, 2018

In the meantime, Mr Trump’s tariff plan has been branded “absolutely unacceptable” by Canadian Prime Minister Justin Trudeau.

Jean-Claude Juncker, president of the European Commission, has said the European Union could respond by taxing American goods including bourbon, blue jeans and Harley Davidson motorcycles.

-With ABC/AAP