Effective Wednesday, U.S. tariffs on foreign steel and aluminum doubled from 25% to 50%, escalating an ongoing trade war that is already weighing heavily on the global economy.
The new tariffs primarily impact imported steel and automobiles.
“In my judgment, the increased tariffs will more effectively counter foreign countries that continue to offload low-priced, excess steel and aluminum in the United States market and thereby undercut the competitiveness of the United States steel and aluminum industries,” the President’s order, signed Tuesday, stated.
The action comes as the US is in the midst of negotiations with other nations in its effort to secure trade deals ahead of the July end of a pause on reciprocal tariffs.
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According to the International Trade Administration, Canada remains the largest foreign supplier of steel and aluminum to the United States, making it particularly vulnerable to these trade measures.
Some economists have also cautioned that the U.S. economy may face the largest consequences from these tariff hikes, saying it will take years to reshore manufacturing and supply chains to the U.S.
The White House, meanwhile, contends tariffs will bolster American manufacturing.
“Domestic steel and aluminum production is imperative for our defense-industrial base. The Trump administration is committed to reshoring manufacturing that’s critical for our national and economic security while unleashing a full suite of supply-side reforms — including rapid deregulation, tax cuts, and unleashing American energy — to continue delivering economic relief for the American people. Billions in steel and aluminum investment commitments and back-to-back, expectation-beating inflation reports prove we can accomplish both goals at the same time,” said White House spokesman Kush Desai.
Several steel trade organizations praised the presidents actions as a way to counter Chinese overcapacity.
“Trump’s plan to revitalize domestic manufacturing and return our country to an economic powerhouse. This action will strengthen a vital industry that has suffered from global overcapacity, largely driven by China,” the Steel Manufacturers Association said.
However, the Aluminum Association thanked Trump for his focus on the industry, but also called for a ‘tailored approach.’
“Tariffs alone will not increase U.S. primary aluminum production nor support the $10 billion invested by the mid-and-downstream industry over the past decade. We need significant new sources of reliable, low-cost electricity and an all-of-the-above policy approach to keep and collect more domestic aluminum scrap. We also need consistent, predictable trade and tariff policy to plan for current and future investment,” Matt Meenan, vice president of external affairs at the Aluminum Association said in a statement.
We urge the administration to take a tailored approach that reserves high tariffs for bad actors — such as China — that flood the market and includes carve outs for proven partners — such as Canada. Doing so will ensure the U.S. economy has the access to the aluminum it needs to grow, while we work with the administration to increase domestic production,” Meenan continued.
While uncertainty has surrounded much of the administration’s larger tariff policy, some contend the impacts of this latest action are not know yet either.
“I think what we’ve seen in the past is that tariffs on steel and aluminum which you put in so many things can become more sort of dissipated in the economy,” a former trade official said. “We’ve had tariffs on these products for a long time and it isn’t say a one for one impact on an end consumer.”
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The tariff hike marks a wider action that that taken in Trump’s first term in office.
“I think what we saw with the steel and aluminum tariffs from the first administration is that there were concerns that the product and country exclusions and other flexibilities built into it really made the policy not very effective so I think the trump administration is taking a different approach to widen the scope to limit if not eliminate exclusions in order to see if that has a more significant impact on the industry,” the official added.
The President announced his intent to raise the tariffs during a speech last week at U.S. Steel's Mon Valley Works-Irvin Plant in West Mifflin, Pennsylvania, to commemorate a deal in which Japan-based Nippon Steel committed to making a large investment in U.S. Steel.
“The strong steel industry is not just a matter of dignity or prosperity or pride,” President Trump said. “It’s, above all, a matter of national security.”
Trump said the new tariff increase would "secure the steel industry in the United States," helping protect the jobs of domestic steel and aluminum workers.
The official details of the deal between Nippon Steel and U.S. Steel have not yet been announced. President Trump, however, has said as part of the deal, Nippon Steel will invest $14 billion and U.S. Steel's headquarters will stay in Pittsburgh.
