Trump announces 25% tariffs on all steel and aluminium imports

U.S. President Donald Trump has ordered the imposition of a 25% import tariff on all steel and aluminum entering the United States, a significant expansion of existing trade barriers. Despite warnings of retaliatory action from political leaders in countries like Canada, the tariff measure will increase the cost of importing these metals into the U.S., potentially impacting various sectors.

American businesses that rely on these imports have also expressed concern, but Trump stated that his plan would boost domestic production, aiming to revitalize the American steel and aluminum industries. He warned that there would be no exceptions and said he was "simplifying" the rules, which would take effect on March 4, signaling a firm stance on the implementation of the tariffs.

Trump stated, "This is a big deal, and it's the start of making America rich again." He further added, "Our country needs to make steel and aluminum in the U.S., not in foreign countries," emphasizing the importance of domestic manufacturing. When asked whether the tariffs would increase prices for consumers, the U.S. President responded, "It will be cheaper in the end," suggesting a long-term benefit despite potential initial cost increases.

Trump also said, "It's time for our great industries to come back to America… this is the first of many measures." He hinted that other tariffs might focus on pharmaceuticals and computer chips, indicating a broader strategy to reshape trade relationships. The U.S. is the world's largest importer of steel, with Canada, Brazil, and Mexico being its top three suppliers. Canada alone accounts for more than 50% of the aluminum imported into the U.S. last year, suggesting that the tariffs will have the most significant impact on Canada if they take effect.

Prior to the announcement, Ontario Premier Doug Ford accused Trump of "moving the goalposts and creating chaos that puts our economies at risk," highlighting the concerns of Canadian provinces heavily involved in metal production. Ontario is a major base for Canadian steel production. A lobbying group for Canadian steel manufacturers called on the Canadian government to take "immediate" retaliatory action against the U.S., while Cody Blois, a leading Member of Parliament from Canada's ruling Liberal Party, said his country was looking at ways to reduce its trade relationship with the U.S., potentially diversifying its trade partners.

Meanwhile, shares of major U.S. steelmakers rose on Monday, with Cleveland-Cliffs' price increasing by nearly 20%, reflecting investor optimism in the domestic steel industry. Prices for steel and aluminum also increased. Most of the rest of the market's reaction was muted, reflecting skepticism about how seriously Trump's plan should be taken, given his record of delaying tariffs or negotiating exemptions to the rules, suggesting a wait-and-see approach among many investors.

Douglas Irwin, an economics professor at Dartmouth College, stated, "It's a little bit like a replay of 2018," referencing previous trade disputes and tariff implementations. He said, "The big question is the uncertainty, whether this is a negotiating tactic or whether he just doesn't want to talk to other countries and really wants to help the steel industry this way," emphasizing the unpredictable nature of the policy and its potential motivations.

Trump administration officials stated that the latest measures are designed to prevent countries such as China and Russia from circumventing tariffs by transshipping low-cost products through other countries, thereby closing loopholes in the existing trade regulations. The U.S. President said he was introducing new standards requiring steel to be "melted and poured" and aluminum to be "smelted and cast" in North America, aiming to ensure that the benefits of the tariffs accrue to North American producers.

Nick Iacovella, a spokesman for the American Prosperity Alliance, which represents steel manufacturers and supports tariffs, said his organization was most concerned about a surge in steel imports from Mexico, exceeding levels reached in 2019. However, he noted that Canada exports far more goods to the U.S. than it imports – a trade deficit that has been a key concern for Trump, highlighting the complexities of the trade relationship. He added, "I don't think they're going to take a one-size-fits-all approach, but I think at least early on, I think what the President is saying is... both of these countries are abusing their relationship with the U.S., and we're going to do something about it," suggesting a targeted approach based on specific trade practices.