WASHINGTON – President Donald Trump has launched his second term with a bold tariff policy that is shaking global trade.
After imposing an additional 10% tariff on Chinese products to deal with the fentanyl crisis, the president took another step by imposing a 25% tariff on steel and aluminum imports.
The move has raised concerns among American trading partners, including the European Union, but is met with praise from domestic metal producers and labor groups. Meanwhile, some economists have raised concerns about the potential inflationary effects of tariffs.
The duties are expected to take effect on March 4th.
Five important takeaways from Trump’s steel and aluminum customs order.
1. Countries most affected by new tariffs
Canada, the largest supplier of steel and aluminum to the US, is subject to new tariffs.
During his first term, Trump imposed a 25% tariff on steel and a 10% tariff on aluminum. He later granted exemptions to several trading partner partners, including Canada, Mexico and Brazil, but he maintained Chinese tariffs.
Both the Trump and Biden administrations have accused China of dumping cheap steel on global markets. In May 2024, Biden also raised tariffs on China’s steel and aluminum, reducing exposure to damping and protecting US producers.
However, some Chinese companies have avoided these tariffs through transship. We run our goods through other countries that do not have customs duties.
Christopher Tan, a professor of supply chain management at the University of California, Los Angeles, believes China is using countries such as Vietnam to avoid US tariffs.
“They did this by shipping iron products to Vietnam, where some small value-added processes take place before they are sent to the US,” Tang told the Epoch Times.
The employee is working on a steel tube tower production line at a factory in Haian, Jiangsu Province, China on September 1, 2024. STR/AFP via Getty Images
China is also increasing the shipment of metals to global South and Latin American countries, he added.
“In the past decade, Vietnam has increased its steel production by 243%, while Vietnam’s steel exports to the US have increased by 264% since 2014,” the report states.
The Beijing administration is also subsidizing steel producers outside of China. Especially in Southeast Asian countries such as Indonesia.
Trump’s new steel and aluminum tariffs aim to protect domestic producers by reducing their dependence on foreign suppliers.
2. What domestic producers say
US steel and aluminum producers are celebrating Trump’s latest tariff plans.
According to AISI, the trade policies implemented during the first Trump administration created a more competitive environment for the American steel industry, resulting in significant investments in new and upgraded facilities.
AISI President and CEO Kevin Dempsey welcomed the news as a step towards addressing market-fighting practices.
“AISI welcomes President Trump’s continued commitment to the strong American steel industry, essential to America’s national security and economic prosperity,” Dempsey said in a statement during the Epoch era.
He said he will work with the Trump administration to implement a trade agenda that levelles the arenas for American steelmakers.
President Donald Trump will sign a series of executive orders in his oval office on February 10, 2025, including a 25% tariff on steel and aluminum. Andrew Harnik/Getty Images
Mills operated at a capacity of 74.4% over the week ending February 1st, according to AISI.
United Steelworkers (USW) thanked Trump for tackling global overpower as “bad actors like China” tried to flood international markets. However, the unions opposed the White House, which punished American trade allies such as Canada for other countries that overturned US industry.
“Canada is not a problem. In fact, Canada is taking steps to coordinate its trade policy with the US to address unfair foreign trade, and ultimately seeking workers on both sides of the border. “statement.
“Our union absolutely considers tariffs to be one of many important tools that need to be adopted to re-adjust trade relations, but we’ll strengthen the manufacturing sector and make it more like Canada’s. It encourages a measured approach to explain relationships with allies. Rules.”
3. Sectors affected by tariffs
The sectors most affected by tariffs are those that rely on metals, such as power manufacturers, automakers and construction. Aluminum is an essential material used in a wide range of products, from beer cans and aircraft parts to foil, cooking utensils and electrical wiring.
These sectors will be cost-increasing in the short term, according to Sunderesh Heragu, a professor of engineering at Oklahoma State University.
“Companies don’t like uncertainty,” Herag told the Epoch Times. “They want something more predictable, and in the event of an uncertain environment, they could keep their capital expenditure down.”
These companies may not have increased costs by 25% in the short term, but he noted until the current stock runs out.
Many business leaders also hope that these tariff threats will be a presidential negotiation tactic, Herag said.
Customers will buy meals at a Chicago grocery store on January 15th, 2025. Scott Olson/Getty Images
4. Impact on consumers
Trump’s tariffs have led to many economic forecasts that predicted these measures could revive inflationary pressures.
The January Consumer Inflation Report was released on February 12th, with annual changes in headlines and core CPI expected to remain stable, according to predictors.
However, the University of Michigan Consumer Survey shows that inflation expectations for the next year rose by 1 percentage point in February to 4.3%.
“Many consumers appear to be worried about high inflation coming back within the next year,” the investigator’s director said. “This is the fifth and fifth time in 14 years.
ING’s commodity strategist Ewa Manthey predicts that aluminum tariffs will cause higher domestic aluminum prices with the risk of rising US Midwest premiums.
“The US Midwest Premium, the best indicator of tariff risk, has already increased by more than 30% since Trump won the US presidential election,” Mansai said in a memo.
According to Mark Malek, CIO at Siebert Financial, this additional cost on the base price of metals has a downstream impact in the broader economy.
“It is the US companies that have to pay customs duties regardless of where the product comes from,” Marek said in a memo sent to the Epoch Times by email.
“So, from the garage to the kitchen, to the structure itself, think about all the items in a house that includes either aluminum or steel. All of these items, if they were enacted as a result of these duties, It could be more expensive. This is supply push inflation.”
These tariffs represent an additional inverse risk to the Federal Reserve’s inflation outlook, a Deutsche Bank economist said in a recent report.
On March 2, 2020, we pass the European Commission building in Brussels, Belgium. Leon Neil/Getty Images
5. Global tension
Trump is expected to introduce additional tariffs later in the week, targeting countries that are currently leviing high tariffs on US products.
He said he intends to implement mutual tariffs.
“In very simple terms, if they charge us, we charge them,” he told reporters on Sunday.
The European Commission said in a statement on February 9th that it will respond to the new tariffs.
“The EU believes there is no legitimacy for the imposition of tariffs on exports. It will respond to protect the interests of European businesses, workers and consumers from unfair measures,” the statement read.
European countries generally view tariff imposition as illegal and economically harmful, the statement added.
