The United States has officially doubled tariffs on foreign steel and aluminum imports to a substantial 50%. This move is part of an effort spearheaded by former President Donald Trump to revitalize the struggling American manufacturing sector. Despite facing backlash and criticism from key trading partners, the Trump administration has pressed forward with this controversial decision, aiming to bolster the domestic industry against what it perceives as unfair competition.
On Tuesday, Trump signed an executive order that formalizes the increase in tariffs. The order states that the higher tariffs “will more effectively counter foreign countries that continue to offload low-priced, excess steel and aluminum in the United States market.” This measure is designed to protect the competitiveness of American steel and aluminum industries, which have been significantly impacted by cheaper foreign products, particularly from China.
The new tariff rates apply to all trading partners with the exception of Britain, which has managed to negotiate a preliminary trade agreement with the US. Under this agreement, tariffs on steel and aluminum imports from the UK will remain at 25% until at least July 9. Notably, about a quarter of all steel consumed in the United States is imported, and the increased levies are expected to particularly affect the closest US trading partners: Canada and Mexico, which rank first and third respectively in terms of steel shipment volumes to the US.
In response to the tariff increase, the Canadian government, through Prime Minister Mark Carney, announced that Canada is actively engaging in intensive negotiations to have these tariffs removed. Meanwhile, Mexico's economy minister, Marcelo Ebrard, described the tariffs as "unsustainable and unfair," especially since Mexico imports more steel from the US than it exports back. Ebrard indicated that Mexico would seek an exemption from the tariff increase, emphasizing that it does not make sense for the US to impose tariffs on a product where they have a surplus.
Days following his approval of the acquisition of US Steel by Japan’s Nippon Steel, Trump highlighted the need for rapid tariff increases on foreign steel and aluminum. He stated, “Our steel and aluminum industries are coming back like never before,” adding that these measures would be a significant boost for American workers in these sectors. Senior officials from the European Union (EU) are also looking to secure an exemption from the higher tariffs, with crucial discussions scheduled between EU Trade Commissioner Maroš Šefčovič and US Trade Representative Jamieson Greer in Paris.
While a 50% tariff is deemed unsustainable for many exporters, sources from Brussels suggest that the EU may hold off on immediate retaliation, given the delicate nature of ongoing trade negotiations. The EU has the authority to implement a €21 billion package of tariffs on US exports, which was agreed upon in April in response to earlier tariffs imposed by Trump. The EU shares a common concern with the US regarding Chinese oversupply, which is a significant factor contributing to the ongoing crisis in the European steel industry, leading to substantial job losses among major producers, including Germany’s ThyssenKrupp Steel.
