Associated Press Economics Writer Paul Wiseman
WASHINGTON (AP) – President Donald Trump is attacking foreign steel and aluminum with a 25% tax. If that sounds familiar, it’s because he did about the same thing during his first term.
Trump’s original metal tariffs gave American struggling steel and aluminum producers some easing from fierce global competition, allowing them to charge higher prices. In anticipation of new tariffs, steel and aluminum producers stocks climbed Monday. Nucor jumped 5.6%, Cleveland-Cliffs jumped 17.9%, and Alcoa jumped 2.2%.
However, tariffs were also sacrificed last time, causing damage to US relations with major allies, increasing the costs of US producers who purchase steel and aluminum and use them to manufacture goods. Ta.
Timothy Zimmerman is Mitchell Metal Products of Merrill, Wisconsin, CEO, one of these downstream companies. And he still has bad memories of that time.
“We were greatly influenced,” he said. “The challenges we faced were unprecedented: the impact of rapid inflation from domestic steel producers. Within a few months, steel prices had risen by about 70% more than what they were… Our (steel) supplier simply broke the contract and gave us options.
But Mitchell Metal Products has been locked in contracts with its own customers, a wide range of businesses, from furniture manufacturers to telecommunications companies. His company’s profit margins were narrowed down, leaving him losing business to European rivals who didn’t have to contest fallout from Trump’s steel fees.
At the time, the overall economic impact on the US was limited, but could be restricted again. This is because steel and aluminum imports are almost rippling in the US economy, which is almost $30 trillion.
Still, new taxes on foreign steel and aluminum, as well as Trump’s other import tax plans, include his promise to raise what matches what was charged by other countries — “Boot US inflation this year And we place an emphasis on global growth,” wrote Jennifer McKeown and Hamad Hussain of Capital Economics on Monday.
Tariffs will strike American allies – again
Steel and aluminum tariffs will be attacked by allies on us. Canada is the largest supplier of foreign steel and aluminum to the US. Mexico is the third largest steel supplier, and Japan and South Korea are also the leading steel exporters to the US
China is widely viewed as a source of problems in the world steel industry. China’s overproduction has killed steel to the world, kept prices low, and damaged steel makers in the US and elsewhere. However, the US has already used trade barriers to eliminate everything but China’s steel trickle. China accounted for less than 2% of US steel imports last year, making it the 10th largest steel supplier to the United States, according to the American Iron and Steel Institute, a trade group.
Slapping his steel and aluminum duties almost seven years ago, Trump reached out to the federal government’s tariff toolkit and pulled out Section 232 of the 1962 Trade Expansion Act.
The 2018 tariffs (25% of steel, 10% of aluminum) sparked anger in Canada and Mexico. US neighbours and allies were hit by trade sanctions and labelled as threats to US national security.
Steel and aluminum tariffs also led to retaliation as US trading partners fought back on taxes on US exports from Kentucky Bourbon to Levi’s jeans.
Trump’s first term tariffs were costly
By making foreign steel more expensive, tariffs have allowed us to allow steelmakers to raise prices, encouraged us to continue running our factories and invest in new capabilities.
But tariffs hit downstream businesses like Zimmerman’s, who had to pay a higher price. In 2021, production at downstream companies fell nearly $3.5 billion due to tariffs, cancelling a $2.3 billion increase in production by aluminum producers and steel makers that year. Investigating trade disputes.
In 2020, researchers at Harvard University and the University of California, Davis found that tariffs created 1,000 jobs, but elsewhere, down 75,000. When tariffs hit seven years ago, Mitchell Metal products adopted a peak of 102 workers. They had to fill the openings and cut salaries by excluding some workers. The company currently employs around 75 people.
Gary Huhbauer, a senior fellow at the Peterson Institute for International Economics, said Trump’s first trade war, which includes tariffs on most Chinese imports, would cost American industry.
“All these tariffs at the time (the net effect on China, aluminum, steel and retaliation) was to reduce unemployment in US manufacturing,” he said. “I hope for the same thing this time.”
Metal tariffs in 2018 have been partially relaxed. In some countries they were dropped. In some cases, they were replaced by import allocations. On Monday, Trump removed all exceptions and exemptions from the original tariffs, increasing collections on aluminum from 10% to 25%.
Zimmerman is supporting the new tariffs to take the hit. “Last week, several large (steel) factories operating in the US announced prices rising, anticipating tariffs, not due to increased demand,” he said. “I think domestic producers work to do something very close to what happened in 2018, or something very similar.”
This time, he said Mitchell Metal products are aiming to be more aggressive in order to help customers absorb some of the higher costs. Otherwise, he said, “It’s not a healthy place for a company.”
Original issue: February 11, 2025 7:25am EST
