President Trump’s drastic tariffs on foreign steel and aluminum came into effect Wednesday, escalating US trade spats with global competitors.
Trump’s 25% tariff on metals hits imports entering the US from all countries around the world. The move, supported by many domestic steel and aluminum manufacturers, is expected to raise the costs of American manufacturers of cars, cans, solar panels and other products, and could slow the wider US economy.
The action against metals was Trump’s latest attempt to leverage tariffs and the American market against foreign governments. Last week he issued sudden tariffs on imports from Canada, Mexico and China, accusing them of invading the United States of those countries, and shortly afterwards cut some of them. The president has threatened to impose many other tariffs, including foreign cars and countries that say they discriminate against the United States.
His approach was filled with market slump and sent many US allies into defensive modes to try and decipher what the president actually wanted. On Tuesday, Trump threatened to double the tariffs on Canadian metals after Ontario responded to Trump’s previous tariffs by charging additional charges on electricity exported to the United States. Within hours, Ontario suspended additional fees and Trump regained the threat.
Metal tariffs, and other taxes to come, could make trade disputes worse again. Foreign governments, including Canada, have vowed to retaliate by issuing taxes that are most likely to hurt U.S. exporters. Europe announced its measures quickly in Brussels on Wednesday. Metal tariffs primarily affect US allies. Canada is the largest supplier of both steel and aluminum for the US. Brazil, Mexico, Korea and Vietnam are also the top suppliers of steel, while United Arab Emirates, Russia and China are the top suppliers of American aluminum.
The tariffs restored and expanded similar measures introduced by Trump in 2018, leading to several long-term trade wars. Trump argued that tariffs are necessary to protect national security and provide reliable sources of metals to wartime troops.
Meanwhile, both Trump and former President Joseph R. Biden Jr. made deals with foreign countries, including Brazil, Mexico, Canada and European countries, screaming at tariffs. The US metals industry complains that sufficient measures are no longer strong enough to keep steel factories and aluminum smelters floating.
Kevin Dempsey, president of the American Iron and Steel Institute, a trade group, said the tariffs were “very effective” compared to previous one-off trade measures targeting specific countries or specific products only.
“Things are far worse for the industry without these tariffs,” Dempsey said.
However, steel and aluminum are used to manufacture many other products, so increasing the price of metals can have ripple effects throughout the US economy. By increasing the cost of basic inputs for many companies, tariffs could hurt manufacturers who employ far more Americans than steel factories and aluminum smelters, and Trump’s plans could support American manufacturing.
Economic Analysis The publication of the US International Trade Commission, an independent, bipartisan organisation, suggested that the costs to the US economy from Trump’s first metal tariff tranche outweigh the benefits.
The survey found that the tariffs on metals collected in 2018 encouraged steel and aluminum buyers to buy more from US sources, leading to a rise in domestic metal prices, expanding US steel production by about 2% from 2018 to 2021.
However, the analysis found that tariffs have increased production costs for companies that manufacture cars, tools and industrial machinery, resulting in a shrinking production in 2021, which increased by about $3.48 billion. The steel and aluminum industry produced an additional $2.25 billion in metals that year due to taxation.
To mitigate these harmful consequences, the Trump administration has now expanded its steel and aluminum tariffs to include a variety of downstream goods, or “derivative products” made from steel or aluminum. Tractor parts, metal furniture, hinges.
Chad Bowun, a senior fellow at the Institute of International Economics, a research institute, said it was an “implicit recognition” that some industries are suffering due to Trump’s previous tariffs.
He said tariffs will create a “cascade protectionism cycle” and that more industries will seek government protection measures, and that it will be “hard to halt” if it goes on.
“Where will you finish?” asked Bown.
Also, due to the higher cost outlook, other US industries, such as automakers, are encouraging them to protect their businesses by seeking tariffs from foreign competitors. Trump said he plans to collect tariffs on foreign cars on April 2nd.
For automakers, metal tariffs are threatening to raise costs when prices for new cars and trucks are already near record highs. The average price of the new vehicle in January was over $48,000, according to Edmunds of the Market Research Group.
“We’ve been working hard to get the better of our customers,” said Jessica Caldwell, Edmunds’ Head of Insights.
Robert Budway, president of CAN Manufacturers Institute, is a trade group representing companies that make steel and aluminum cans for food, soda, beer and paints, said tariffs would result in higher packaging costs and would ultimately be handed over to American consumers.
Foodpackers were more dependent on imported metals and simply paid them more, Budway said. Steel costs rose 53% between 2019 and 2024 after Trump first imposed tariffs, according to research institute figures.
“It’s just going to make the price higher,” Budway said.
The measure also appears likely to induce foreign retaliation that opposes US exporters.
Canadian officials have planned retaliation, adding to the 25% tariffs that the government put in $30 billion in American goods this month, in response to Trump’s tax.
“The Canadian government was clear about this issue from the start,” said Gabriel Brunette, a spokesman for Finance Minister Dominique LeBlanc, who leads Canada’s trade response. “If the US moves forward,” he said Tuesday that “we are ready to respond firmly and proportionately.”
British Secretary of Commerce Jonathan Reynolds called the tariffs “disappointing.” The country is negotiating an agreement with the US to investigate local producers into products and eliminate additional measures, he said Wednesday. The Australian Prime Minister said Australia would not impose mutual tariffs to boost prices for Australian consumers.
The European Union has made it clear that it will fight back against tariffs.Economically opposite effect” and gives a two-part response.
Authorities allow the tariff set, suspended on April 1, to fully power and affect everything from boats to bourbons. They are also beginning the process of identifying goods worth 18 billion euros (including farm and industrial products) to slap them at higher tariffs.
The European Union’s goal is to hit the US as hard as it is hitting the European economy, in the hopes of pulling it to the negotiation table.
“It is not our common interest to burden tariffs on our economy,” European Commission President Ursula von der Leyen said in a statement.
However, trading was difficult. European Union trade commissioner Maros Sevkovic said in a news briefing on Monday that he traveled to the US “in search of constructive dialogue” last month.
“In the end, as it is said, one hand can’t applaud,” he said. “The US administration doesn’t seem attractive to make deals.”
European officials also struggle to get their American counterparts over the phone.
Von der Leyen has not spoken individually with Trump since taking office. When asked at a press conference on Sunday she might do so, she said, “We’ll have a personal meeting at the right time.”
Neil E. Boudette Reports of contributions.
