Paul Wiseman and Josh Bork
WASHINGTON (AP) — President Donald Trump is again assaulting foreign steel, foreign aluminum and Canada’s three biggest stimulants.
Trump on Wednesday effectively coats a 25% tax (customer duties) on all steel and aluminum imports. And on Tuesday, the president said that after Ontario halted its own retaliation plan, it would double the future tax on two metals to 50% only if it came from Canada to pull back the threat by the afternoon by the White House.
Pain is not felt solely by foreign steel or aluminum plants. The tariff could raise the costs for American companies using metals, such as automakers, construction companies and beverage manufacturers using cans. The threat to the economy is rattling the stock market.
“Unsolved tariffs raise prices, sacrifice American jobs and strain the alliance,” Philip Luck and Evan Brown of the Centers for Strategic and International Studies wrote in a report last month.
Trump has been pushing tariffs on him from his first term
The latest tariffs are a lively replay from Trump’s first term.
In 2018, to protect American steelmakers from foreign competition, he imposed a 25% tariff on foreign steel and 10% on aluminum, in order to use the Trade Act of 1962 to declare it a threat to US national security.
This tariff landed most heavily on American allies. Canada is the largest supplier of foreign steel, accounting for more than half of aluminum exports to the US. Mexico, Japan and South Korea are also major steel exporters to the US.
The president argues that importing steel is a threat to the very existence of the United States. “For example, if we don’t have steel or many other things, we don’t have the military and frankly, we’re not that long,” Trump said in a joint speech to Congress last week.
His 2018 sanctions were gradually watered down.
Trump escaped Canada and Mexico after agreeing to his demands for a revamped North American trade agreement in 2020. For some US trading partners, tariffs have replaced import allocations. The first Trump administration also allowed American companies to request tariff exemptions if, for example, they could not find the necessary steel from American producers.
This time, Trump has closed those loopholes and raised the aluminum levy to 25%.
He shows an appetite to be higher, as the apparently short-lived 50% tariffs on Canadian steel and aluminum suggests.
Trump was originally back to the Ontario government after charging a 25% extra charge on electricity sold to the US. Ontario has suspended its planned electricity surcharge after Trump said he attacked Canadians with a 50% metal tax. In response, White House trade adviser Peter Navarro said the US would pull back by doubling tariffs on Canadian steel and aluminum.
I’m hoping for the same thing
Trump’s first-phase steel and aluminum tariffs benefited American producers of two metals and encouraged them to increase production. However, the beneficiaries were relatively few. For example, the US steel industry employs less than 150,000 people. Walmart alone has 1.6 million employees in the United States.
Furthermore, economists found that the profits of the steel and aluminum industry were offset by the costs imposed on “downstream” manufacturers using steel and aluminum. In 2021, production at such companies fell nearly $3.5 billion due to tariffs, cancelling a $2.3 billion increase in production by US International Trade Commission aluminum producers and steel manufacturers discovered in 2023.
Now, “There is no particular reason to think that economics is no longer the same. Small benefits for US steel and aluminum producers and employees, but the overall losses for other U.S. manufacturing industries,” says Christine McDaniel, a researcher at the Mercatus Center at George Mason University.
In itself, metal tariffs are unlikely to cause significant damage to the nearly $30 trillion US economy. “Steel and aluminum – they’re just a drop in the ocean,” said Satyam Panday, chief US and Canadian economist at S&P Global Ratings.
But Trump doesn’t just hit steel and aluminum. He slaps 20% tariffs on all Chinese imports. He plans to smash all Canadian and Mexico products with a 25% tax next month, limiting tariffs on Canada’s energy to 10%. And he has an ambitious and complicated plan that imposes “mutual tariffs.” “We raise the import taxes of countries that impose high collection on American products.
The scope and unpredictability of Trump’s tariff agenda threatens to rekindle inflation and slow growth by blocking businesses from investing until trade tensions ease. “If you’re an executive in the boardroom, are you really going to tell your board it’s time to expand that assembly line?” said John Murphy, senior vice president of the U.S. Chamber of Commerce.
US steel manufacturers raise prices
US steel manufacturers can step up their production to offset lost imports. They can also raise prices – and have already begun, putting companies using American Steel at a disadvantage for competitors who get their own things elsewhere.
According to Steel Benchmarker, US Steel was $854 per metric tonne as of February 24, a much higher average global export price than $488.
Aluminum is a different story. There are only four aluminum smelters in the United States, and last year only two were fully operational. In a report last week, S&P Global said it would require “small cities to increase production of US smelters.”
Trump’s steel and aluminum tariffs are also certain to withdraw retaliation taxes. Canada is scheduled to be announced on Wednesday.
Fighting with angry Canadians
Critics say Trump’s metal tariffs are hitting the wrong target.
China is widely viewed as a source of problems in the world steel industry. Heavy subsidized by Beijing, China’s overproduction flooded the world with steel, kept prices low, and damaged steel makers in the US and elsewhere.
However, the US has already used trade barriers to eliminate most Chinese steel. China accounted for less than 2% of US steel imports last year, according to the American Iron and Steel Institute. “Instead of focusing on the real issues of policies that dominate China’s market – the US risks being entangled in tariff disputes with its nearest allies,” writes Lac and Brown at the Center for Strategic and International Studies.
Meanwhile, companies using steel are already feeling the pain.
Located in Portland, Oregon, Steelport Knife Co. uses US steel with knives for home cooks and professional chefs. Last month, American steel suppliers were forecasting Trump tariffs, increasing prices by 10%.
CEO Ron Khormaei says Steelport’s Japanese and German competitors are benefiting. “It’s cheap for them,” he said. Khormaei says that if his small company (with 12 employees) raises prices, he loses his business. So he does everything he can to cut costs. For example, they keep stock tighter and limit travel to exhibitions.
And he faces another problem. “Canadians are angry with us,” he said.
Khormaei said one of his Canadian customers just emailed the order. We love your products. We haven’t bought it.”
Original issue: March 11, 2025, 7:19pm EDT
