President Donald Trump on Monday announced sweeping 25% tariffs on all steel and aluminum imports into the United States. The new levies, set to take effect on March 4, come on top of existing metals duties, marking another aggressive step in Trump’s longstanding efforts to cut trade deficits and push for greater economic protectionism.
Speaking from the Oval Office, Trump framed the move as a necessary correction to years of unfair trade practices, asserting that foreign producers had been exploiting American industries.
“Today, I’m simplifying our tariffs on steel and aluminum … This is the beginning of making America rich again,” Trump declared as he signed dual executive orders mandating the tariffs. “No exceptions, no nothing.”
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Trump, who has long argued that unfair trade practices have weakened the U.S. manufacturing base, insisted that the tariffs would bring back jobs in the steel and aluminum industries.
“We were being pummeled by both friend and foe alike,” he said. “It’s time for our great industries to come back to America.”
A Repeat of 2017 – But Harsher
This is not the first time Trump has targeted industrial metals with trade barriers. Early in his first term, in 2017, he imposed 25% tariffs on steel and 10% on aluminum. However, after facing backlash from major trading partners, he granted exemptions to some allied nations, including Canada, Mexico, Australia, Brazil, South Korea, and Argentina. The latest tariffs, however, appear to eliminate those exemptions, ensuring that all steel and aluminum imports will now be subject to the full 25% duty.
The move is widely expected to trigger retaliatory actions from affected countries, many of whom vehemently opposed the previous round of tariffs. Trade experts warn that the impact could be more severe this time, as the global economic environment remains fragile, with lingering concerns about inflation and slowing growth.
Although Trump insists that the tariffs will boost domestic production, economic analysts warn that they could backfire, increasing costs for U.S. manufacturers and consumers while straining international trade relations.
Frank Lavin, a former U.S. ambassador to Singapore, told CNBC’s “Street Signs Asia” that the tariffs are “not simply symbolic but punitive and will cost jobs in the U.S.” Lavin cautioned that the move could harm the U.S. auto industry, which heavily relies on imported steel and aluminum, and could push up prices across multiple sectors.
“We’re in for a bit of bad news in the near term,” Lavin said. “It will obligate other countries to respond. So we’re going to see deterioration, and I think worst of all, from Mr. Trump’s point of view, is we’re going to see a little bit of inflationary pressure as well.”
The timing of the tariff announcement is also significant, as it could affect Federal Reserve policy. Lavin noted that the potential inflationary impact of the tariffs might force the U.S. Federal Reserve to hold off on rate cuts, a move that could dampen economic growth.
“Trump was angry at the U.S. Fed last time when there was no easing. Well, there’s not going to be any easing next time either, if he keeps these tariffs in place,” Lavin warned.
Is Trump Using Tariffs as a Bargaining Chip?
Some analysts believe Trump could be using the tariffs as leverage in trade negotiations, particularly with Canada and Mexico, to push for concessions on issues like border security and trade agreements.
However, Lavin dismissed the idea that Trump’s tariff strategy would yield quick results, pointing out that the broad, global nature of the steel and aluminum duties would make them harder to resolve through negotiation.
“When you’re talking about a global tariff on steel and aluminum and a tariff on China, you’re not going to see a quick response and a quick resolution of these matters,” he said.
Trump, however, remains defiant, emphasizing his “reciprocal” stance on tariffs, signaling that the U.S. is ready to match or exceed any duties imposed by other countries.
“If they charge us, we charge them. If they’re at 25 [percent], we’re at 25. If they’re at 10, we’re at 10. And if they’re much higher than 25, then that’s where we are at too,” Trump said.
Potential Global Trade Disruptions
With global supply chains already under stress, economists warn that Trump’s new tariffs could escalate trade tensions and further disrupt international markets. Countries affected by the tariffs may retaliate by imposing their own duties on American exports, leading to a tit-for-tat trade war.
Major U.S. trading partners, including the European Union and China, have not yet responded officially, but officials in Brussels and Beijing have previously threatened to retaliate against any new American tariffs.
If retaliation occurs, U.S. exporters, particularly in the agricultural and manufacturing sectors, could suffer. In 2018, during the last major trade war under Trump, China responded to U.S. tariffs by targeting American soybeans and other agricultural products, dealing a significant blow to American farmers.
Uncertainty in the Markets
Following Trump’s announcement, markets reacted with caution, with steel and aluminum stocks seeing temporary gains, but broader market indices showing increased volatility. Investors remain wary of how the tariffs could affect corporate earnings and whether the move will further strain relations between the U.S. and its allies.