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President Donald Trump has officially raised tariffs on all steel and aluminum imports to 25%, reinforcing his long-standing stance on trade protectionism. Announced on Wednesday, the move aims to stimulate U.S. factory jobs amid growing concerns about economic instability and volatile financial markets.
End of Exemptions
Trump’s decision removes all exemptions from the 2018 steel and aluminum tariffs while increasing the aluminum tariff from its previous rate of 10%. This policy shift stems from a directive issued in February and aligns with his broader trade strategy to disrupt global commerce and encourage domestic manufacturing.
As part of this effort, the administration has already imposed separate tariffs on Canada, Mexico, and China. Additional tariffs targeting imports from the European Union, Brazil, and South Korea are set to take effect on April 2, with the White House planning to implement “reciprocal” trade rates.
Trump Defends Tariffs as Job Creators
Speaking at a Business Roundtable meeting on Tuesday, Trump asserted that the tariffs were already prompting companies to invest in U.S. manufacturing. Despite an 8% decline in the S&P 500 stock index over the past month due to economic slowdown fears, the president remains steadfast in his belief that higher tariffs will drive domestic production.
“The higher it goes, the more likely it is they’re going to build,” Trump told business leaders. “The biggest win is if they move into our country and produce jobs. That’s a bigger win than the tariff themselves, but the tariffs are going to be throwing off a lot of money to this country.”
Canada Tariffs Avoided After Ontario Policy Shift
Trump had initially considered imposing a 50% tariff on Canadian steel and aluminum but ultimately decided to maintain the 25% rate. This decision followed Ontario’s announcement to suspend its planned surcharge on electricity exports to Michigan, Minnesota, and New York.
In many ways, Trump’s latest move seeks to address what he perceives as unresolved trade issues from his first term. While he previously imposed significant tariffs, the revenues generated were insufficient to meaningfully impact inflation.
His 2018 steel and aluminum tariffs were diluted by various exemptions. Canada and Mexico managed to avoid the tariffs after agreeing to a renegotiated North American trade deal in 2020. Other trading partners accepted import quotas instead of tariffs, and U.S. companies could apply for exemptions if they struggled to source domestic steel.
Economic Impact: Gains for Some, Losses for Others
While the tariffs may benefit U.S. steel and aluminum producers, they are also expected to raise costs for manufacturers relying on these metals. Economic studies have shown that the broader manufacturing sector has suffered due to increased input costs.
In 2021, production in downstream industries—those that use steel and aluminum—declined by nearly $3.5 billion due to tariff-related cost increases, according to a 2023 report from the U.S. International Trade Commission. This loss outweighed the $2.3 billion production increase seen by steel and aluminum manufacturers.
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