President Donald Trump signed a pair of executive orders on Monday imposing 25% tariffs on imported steel and aluminum, the latest salvo in his ongoing effort to overhaul the U.S. trading relationship with the rest of the world.
“This is a big deal - making America rich again,” Trump said as he signed the orders.
The president’s actions are designed to promote greater domestic steel industry production and employment. But they will increase costs for manufacturers that use the industrial metals to produce goods such as automobiles and appliances. Those higher costs are at odds with Trump’s repeated campaign promises to bring down the cost of living.
“This isn’t just about trade. It’s about ensuring that America never has to rely on foreign nations for critical industries like steel and aluminum,” said Peter Navarro, White House senior counselor for trade and manufacturing.
Even before the official announcement, which the president previewed Sunday, the European Commission slammed it as “unlawful and counterproductive.” German Chancellor Olaf Scholz vowed that Germany, Europe’s largest exporter of steel to the United States, could retaliate “within an hour” of any U.S. move.
Trump may announce additional U.S. trade measures as soon as Tuesday. He has promised to debut a new reciprocal tariff that would set U.S. import taxes to match those that other nations apply to U.S. products. One target is the European Union, which maintains a 10% tariff on cars imported from the United States while European vehicles are hit with a 2.5% U.S. tax when sold to American customers.
Trump’s reciprocal plan would represent a departure from recent decades when U.S. policymakers sought lower tariffs in most cases to reduce product costs and spur global integration. Trump’s new approach would further increase U.S. trade barriers, particularly on products from nations such as India and Brazil.
Combined with the raft of tariff plans he has proposed or implemented since taking office three weeks ago, the reciprocal proposal underscores Trump’s determination to enact historic changes in U.S. trade policy.
[The winners and losers of Trump’s steel and aluminum tariffs]
The steel and aluminum tariffs, meanwhile, are likely to renew tensions between the United States and its North American neighbors, which are among its largest suppliers of steel imports. The president just last week paused plans to impose a separate set of import taxes on goods from Canada and Mexico, which he linked to concerns over immigration and drug trafficking.
Canada, the No. 1 foreign supplier to the United States, last year shipped 6.6 million tons of steel to American buyers, according to the American Iron and Steel Institute (AISI). Brazil, Mexico, South Korea and Vietnam rounded out the top five import sources.
Though China is a relatively modest U.S. supplier, shipping 508,000 tons to U.S. customers, its global dominance of the steel industry makes it the administration’s real target.
China produces more than half of global steel output. As its domestic economy has slowed amid the collapse of a property bubble, its mills have continued to churn out more steel than the country’s builders and manufacturers can use.
[China’s retaliatory tariffs take effect, ratcheting up trade war with U.S.]
The amount of excess steel available on global markets in 2023 reached 551 million metric tons, four times what the European Union produced, according to the Organization for Economic Cooperation and Development in Paris. That surplus supply weighs on global prices, keeping them too low for U.S. steelmakers to operate profitably without tariff protection.
In 2018, Trump imposed similar import taxes on steel and aluminum during his first term. They were later amended to permit continuing shipments from major U.S. allies such as Canada and Mexico, and replaced with an annual quota for Argentina, Brazil and several other nations.
But provisions for specific products in some cases, or all metals from countries like South Korea, to avoid those tariffs have been abused, a White House official said. The result has been continued weakness in the domestic industry, including the closure in recent years of aluminum smelters in Kentucky and Washington state.
Steel industry executives also complain that Chinese steel often enters the U.S. market via third countries such as Mexico.
Both China and Russia have exploited loopholes in the existing metals tariffs to ship their steel and aluminum to the United States via Canada and Mexico, the official told reporters Monday.
The new tariff regime aims to close those loopholes by instituting requirements for steel and aluminum to be cast or smelt in North America before reaching the U.S. market. Customs and Border Protection officials also will intensity their oversight of industrial metals shipments to prevent Chinese or Russian products being mislabeled to evade tariffs, the official said.
The tax on aluminum imports also will increase to 25% from 10% currently.
“The underlying circumstances that led to the original tariffs on steel and aluminum in 2018 haven’t changed: The metals are crucial to our national security, and China’s overcapacity continues to roil global markets,” said Scott Paul, president of the Alliance for American Manufacturing, a nonprofit backed by the United Steelworkers union.
Yet even as the White House official criticized existing tariff exemptions, Australia’s prime minister on Monday was discussing with Trump a carve-out for Australian steel.
Prime Minister Anthony Albanese said he had pressed his nation’s case for an exemption from the tariffs during a “very constructive and warm” phone call with the U.S. president.
“I presented Australia’s case for an exemption, and we agreed on wording to say publicly, which is that the U.S. president agreed that an exemption was under consideration in the interests of both of our countries,” Albanese said at a news conference in Canberra after the call.
Albanese, a center-left politician who had a close relationship with President Joe Biden, is trying to follow in the footsteps of another Australian prime minister, conservative Malcolm Turnbull, who secured an exemption to U.S. steel and aluminum tariffs during Trump’s first term. Like Turnbull, Albanese said he emphasized his nation’s trade deficit with the United States.
“On tariffs - particularly with regard to steel and aluminum - the U.S. has a trade surplus with Australia, and it’s had since the Truman administration,” Albanese said.
Trump later praised Albanese in remarks to reporters and said he would give “great consideration” to his request.
The E.U. responded to Trump’s 2018 actions with targeted tariffs, designed for maximum strategic political impact. The bloc went after goods based in the home states of Republican leaders, including bourbon from then-Senate Majority Leader Mitch McConnell’s home state of Kentucky.
Trump’s March 2018 tariffs were aimed at getting U.S. steel mills to operate at 80% of capacity. For the week that ended Feb. 1, the domestic steelmaking industry remained below that figure at 74.4% of capacity, according to AISI.
Subsequent studies showed that the first-term tariffs were a net loser in terms of U.S. jobs. Industries that use steel, for example, employ far more Americans than do steel mills. The auto and auto-parts industry employs nearly 1 million workers compared with fewer than 85,000 in the steelmaking industry, according to the Bureau of Labor Statistics.
“The job losses created by putting these steel-using industries at risk appear to be substantial, and well in excess of any jobs that may have emerged in the steel-production industry as a result of the tariffs,” concluded a 2020 study by economists Kadee Russ of Harvard University and Lydia Cox of the University of California at Davis.
Trump’s latest tariffs follow an increase of 10 percentage points in existing levies on goods from China, and the announcement of new 25% tariffs on all goods from Canada and Mexico, which have been delayed until early March.
The president has also said he plans to introduce additional import taxes on European goods plus pharmaceuticals and copper.
In Canada, where the steel and aluminum industries employ about 32,500 people, Industry Minister Francois-Philippe Champagne called the tariffs “totally unjustified.”
The Canadian chapter of the United Steelworkers union, meanwhile, called on the government to retaliate.
“Trump’s tariffs are a direct attack on workers and communities,” said Marty Warren, the union’s national director for Canada. “We’ve been through this before, and we know these kinds of reckless trade measures don’t work and hurt workers, destabilize industries and create uncertainty across the economy on both sides of the border.”
Candace Laing, president of the Canadian Chamber of Commerce, said that Trump’s announcement “makes it clear that perpetual uncertainty is here to stay.”
In anticipation of Trump’s return to the White House, E.U. officials drafted lists of potential retaliatory tariffs, even as they made clear that they would rather negotiate. European leaders have warned that a trade war would harm both sides and only benefit adversaries including Russia.
Some E.U. officials have suggested Trump might be mollified by offers to buy more liquefied natural gas or military equipment from U.S. companies - or that he might welcome European pledges to take a harder line on Beijing. Officials warn they are ready to gradually ratchet up the response if needed.
“We don’t want tariffs, but we have prepared so that we can be ready to move fast. So that we can negotiate or retaliate if we need to,” said an E.U. diplomat, speaking on the condition of anonymity to share internal deliberations.
In Brazil, Finance Minister Fernando Haddad said the government wouldn’t take any action in response to the tariffs until they were formalized. For much of the day Monday, the Brazilian steel sector was left scrambling, trying to discern a rationale that might explain why Trump had decided to levy such a steep tariff on steel exports to the United States. The American market is huge for Brazilian steel mills, accounting for nearly half of all steel exports.
José Augusto de Castro, the executive president of the Brazilian External Commerce Association, told the newspaper O Globo that the tariff was “extremely high and without any technical basis.”
He said that the measure, if carried out, would ultimately harm the United States.
“Who’s going to end up paying are the Americans,” he said. “It will jack up the cost of internal production and raise inflation.”
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Ellen Francis in Brussels, Amanda Coletta in Toronto and Terrence McCoy in Rio de Janeiro contributed to this report.