On Wednesday, President Trump’s broad tariffs on foreign steel and aluminum came into play, intensifying trade tensions with America’s global rivals, including close allies who’ve been on a rollercoaster due to his unpredictable trade policies.
These tariffs, imposing a 25 percent duty on metals imported into the United States from any part of the globe, have sparked support from many U.S.-based steel and aluminum producers. However, the impact of this move is expected to elevate costs for American manufacturers of various products like cars, tin cans, and solar panels, potentially cooling down the broader U.S. economy.
This latest action on metals forms part of Mr. Trump’s strategy to wield tariffs and America’s market leverage against foreign nations. Just last week, he slapped hefty tariffs on Canada, Mexico, and China, pointing fingers at them for the influx of drugs and migrants into the U.S., only to later dial them back. The president is also contemplating additional tariffs, targeting foreign cars and nations he accuses of discriminating against the U.S.
This approach has triggered market downturns and sent many U.S. allies scrambling to understand the president’s actual demands. On Tuesday, the stakes rose when Mr. Trump threatened to double tariffs on Canadian metal after Ontario responded to previous U.S. tariffs by imposing a surcharge on electricity to the U.S. Yet, Ontario quickly retracted the surcharge, and Mr. Trump pulled back his threats.
The metal tariffs, along with other upcoming duties, are likely to exacerbate trade conflicts. Countries like Canada and those in Europe have pledged retaliation, which could harm U.S. exporters. The main entities affected by these metal tariffs are U.S. allies: Canada tops the list as the largest supplier of both steel and aluminum to the U.S., followed by Brazil, Mexico, South Korea, and Vietnam for steel, and the United Arab Emirates, Russia, and China for aluminum.
These tariffs essentially revive and broaden similar ones from 2018, which triggered several prolonged trade disputes. Mr. Trump defended these measures as essential for national security, ensuring a steady supply of metals for military needs during wartime.
Over the past years, various agreements between Mr. Trump, former President Joe Biden, and foreign nations like Brazil, Mexico, Canada, and European countries have chipped away at these tariffs. Nonetheless, the U.S. metals industry has argued that these diluted measures fail to sustain steel mills and aluminum smelters.
Kevin Dempsey, president of the American Iron and Steel Institute, emphasizes that the tariffs have been “very effective” compared to earlier isolated trade actions targeting specific countries or products.
“Without these tariffs, the industry’s situation would be far worse,” Dempsey noted.
Yet, the widespread use of steel and aluminum across countless products means increasing metal prices could send shockwaves through the U.S. economy. With higher input costs, manufacturers employing far more Americans than steel and aluminum plants might suffer, potentially undermining Mr. Trump’s intent to boost domestic manufacturing.
An economic study by the U.S. International Trade Commission, an independent bipartisan body, revealed that the economic toll from Mr. Trump’s initial round of metal tariffs outweighed the benefits. According to the analysis, these tariffs prompted more domestic purchases of steel and aluminum, hiking local metal prices and boosting U.S. steel production by roughly 2 percent from 2018 to 2021, the years reviewed. However, the associated costs led to a $3.48 billion contraction in industries producing vehicles, tools, and industrial machinery, compared to a modest $2.25 billion increase in steel and aluminum production that year.
To counteract these negative effects, the Trump administration has widened its steel and aluminum tariff reach this time, encompassing various downstream goods or “derivative products” made with these metals, including tractor parts, metal furniture, and hinges.
Chad Bown, senior fellow at the Peterson Institute for International Economics, called this an “implicit acknowledgment” of the damage done to some industries by Mr. Trump’s earlier tariffs.
Bown explained that such tariffs initiate a “cycle of cascading protectionism,” where more industries seek government protection, a cycle that “may be difficult to stop” once unleashed.
“So where does it end?” Bown mused.
Concern over rising expenses has led other American industries, like automakers, to advocate for tariffs against foreign competitors to safeguard their interests. Mr. Trump has indicated plans to impose tariffs on foreign cars by April 2.
For automakers, metal tariffs pose a cost threat as new car and truck prices already hover around record highs. In January, the average new vehicle price climbed to over $48,000, as per market research group Edmunds.
“Affordability is a major headache for American car buyers dealing with high prices and interest rates,” explained Jessica Caldwell, insights head at Edmunds.
Robert Budway, president of the Can Manufacturers Institute, a trade association representing companies producing steel and aluminum cans for foods, beverages, and paints, noted that tariffs would inflate packaging costs, which would ultimately be borne by American consumers.
Manufacturers in the food packaging sector are increasingly relying on imported metals and simply paying more for them, Budway observed. According to institute data, the price of a steel can jumped 53 percent between 2019 and 2024 following the initial tariffs imposed by Mr. Trump.
“It just pushes the costs higher,” Budway remarked.
These measures are likely to invite counteractions from foreign nations, negatively replaying against U.S. exporters.
Canadian authorities have indicated plans to respond with 25 percent tariffs on $30 billion worth of American goods, countering Mr. Trump’s levies.
“The Canadian government has been crystal clear on this right from the start,” said Gabriel Brunet, spokesperson for Canada’s finance minister Dominic LeBlanc, managing Canada’s trade response. “Should the U.S. proceed” with these metal tariffs or additional charges, Brunet stated on Tuesday, “we are prepared to respond firmly and proportionately.”
Meanwhile, the European Union is readying its own countermeasures, labeling the tariffs as “economically counterproductive.”
During a press briefing on Monday, Maros Sefcovic, the E.U.’s trade commissioner, noted that he visited the U.S. recently, seeking constructive discussions.
“At the end of the day, it’s like they say, one hand cannot clap alone,” he highlighted. “The U.S. administration seems disinterested in forging an agreement.”
The E.U. already has a series of tariffs lined up—like 25 percent duties on American whiskey—set to activate by the end of March. A trade-centric group within the E.U. arena spent last year gearing up for diverse scenarios, though it has yet to disclose updates to its tariff lists, according to three diplomats speaking under anonymity to discuss non-public matters.
However, Europeans are grappling with crafting an appropriate response to these looming tariffs, compounded by difficulties in contacting their American counterparts.
European Commission President Ursula von der Leyen hasn’t had a personal meeting with Mr. Trump since his stint as president. When prompted at a news briefing on Sunday about potential talks, she mentioned, “We’ll meet face-to-face when the time is right.”
Neal E. Boudette contributed to this report.
