- Aiming to boost U.S, Trump Imposes 25% Tariffs on Steel and Aluminum Imports
- EU retaliates with tariffs on U.S. goods
- Critics warn of job losses and higher costs
On Wednesday, President Donald Trump imposed sweeping 25% tariffs on all steel and aluminum imports into the United States, a move designed to support U.S. manufacturing but which could lead to higher prices for a wide range of consumer and industrial goods. This decision is part of Trump’s broader tariff strategy to address trade imbalances and boost domestic industries, though it risks triggering a global trade conflict.
The European Union, which is now subject to these tariffs for the first time since Trump returned to office, quickly responded with countermeasures targeting U.S. exports, including items like bourbon, boats, and motorbikes. These new tariffs are set to go into effect in April.
This marks the first instance in Trump’s second term where tariffs have been applied universally to all countries. While the move could benefit American steel and aluminum industries, it risks raising the cost of these metals for manufacturers, potentially pushing prices higher for consumers. This scenario mirrors the impact of Trump’s first-term tariffs, which, despite modest gains in U.S. production, resulted in higher costs for industries like car manufacturing, tools, and machinery. A 2023 analysis by the International Trade Commission found that these cost increases shrank the output of those industries by over $3 billion in 2021.
The tariffs could also negatively affect the very industries they are meant to protect. Alcoa’s CEO, William Oplinger, warned that these tariffs could lead to the loss of up to 100,000 American jobs, including 20,000 in the aluminum sector.
Prior to this move, Trump’s tariffs were largely limited to China, Mexico, and Canada. Mexico and Canada could still avoid tariffs through compliance with the USMCA until April 2.
In response to the tariffs, the European Union announced countermeasures on U.S. goods worth up to €26 billion ($28 billion), describing them as “swift and proportionate.” However, according to S&P Global Ratings, the tariffs are not expected to have a significant macroeconomic impact on Europe, as China has become the EU’s top export destination for steel and aluminum.
Australian Prime Minister Anthony Albanese criticized the tariffs, calling them “unjustified” and “against the spirit of our enduring friendship.” While condemning the move, Australia stated it would not impose retaliatory tariffs on the U.S., arguing that escalating trade tensions harm both economies.
The tariffs are not without their complications for the U.S. as well. The U.S. imported $31.3 billion in iron and steel and $27.4 billion in aluminum last year. Canada, the largest source of these metals, accounted for $11.4 billion in aluminum and $7.6 billion in iron and steel imports. Other major suppliers include Mexico, China, and South Korea.
The impact of these tariffs extends beyond raw materials. Many goods, from cars to appliances to medical devices, depend on steel and aluminum, meaning prices for these items could increase. Automakers, for instance, may face higher costs for parts like bumpers or radiators, even if these components come from countries like Canada or Mexico, which are also affected by the tariffs.
The prospect of higher prices has already led to increased market prices for steel and aluminum. Over the last two months, domestic steel prices have surged by more than 30%, while aluminum prices have risen about 15%. Large industrial customers may avoid some of these price hikes in the short term due to long-term contracts, but over time, they too will face higher costs, even for domestically produced products.
Ahead of the tariffs’ implementation, Trump reversed his earlier decision to double steel and aluminum tariffs on Canada. Instead, these materials from Canada will be subject to the same 25% levy as those from other countries. This change came after Ontario Premier Doug Ford agreed to suspend electricity surcharges for U.S. customers. In response, Trump announced plans to meet with Canadian officials to renegotiate parts of the USMCA.
