President Donald Trump has ordered a 25% import tax on all steel and aluminium entering the US in a major expansion of existing trade barriers.
The tariffs, which will increase the costs of importing the metals into the US, come despite warnings of retaliation from some political leaders in Canada – America’s biggest supplier of the metals – as well as other countries.
US businesses dependent on imports have also raised concerns, but Trump has said his plans will boost domestic production.
He warned there would be no exceptions, saying he was “simplifying” the rules, which are set to come into effect on 4 March.
“This is a big deal, the beginning of making America rich again,” Trump said.
“Our nation requires steel and aluminium to be made in America, not in foreign lands,” he added.
When asked if tariffs could increase prices for consumers, the US president responded: “Ultimately it will be cheaper.”
“It’s time for our great industries to come back to America…this is the first of many,” he added, suggesting other tariffs could focus on pharmaceuticals and computer chips.
The US is the world’s largest importer of steel, counting Canada, Brazil and Mexico as its top three suppliers.
Canada alone accounted for more than 50% of aluminium imported into the US last year. If the tariffs come into force, they are expected to have the most significant impact on Canada.
Late on Monday, Canada’s Minister of Innovation, Francois-Phillippe Champagne, said the tariffs were “totally unjustified”.
“Canadian steel and aluminium support key industries in the US from defence, shipbuilding, energy to automotive,” Champagne said. “This is making North America more competitive and secure.”
Ahead of the announcement, Ontario premier Doug Ford, whose province is home to much of Canada’s steel production, accused Trump of “shifting goalposts and constant chaos, putting our economy at risk”.
The lobby group for Canadian steel makers called on the Canadian government to retaliate against the US “immediately”, while Kody Blois, a leading MP from Canada’s governing Liberal Party, said his country was looking for ways to reduce its trade relationship with the US.
“This is completely upending what has been a very strong partnership,” he told BBC Newshour ahead of the official order.
Meanwhile, share prices of the major US steel-makers rose on Monday in anticipation of the order, with the price of Cleveland-Cliffs jumping nearly 20%. Prices for steel and aluminium also jumped.
The response in much of the rest of the market was muted, reflecting questions about how serious Trump is about his plans, given his track record of postponing tariffs, or negotiating exemptions to the rules.
In 2018, during his first term, Trump announced tariffs of 25% on steel and 15% on aluminium, but eventually negotiated carve-outs for many countries including Australia, Canada and Mexico.
‘Replay of 2018’
“This is sort of a replay of 2018,” said Douglas Irwin, a professor of economics at Dartmouth College.
“The biggest question is the uncertainty over whether this is a bargaining tactic or whether he just doesn’t want to talk with other countries and really wants to help out the steel industry in that way.”
Last week, Trump ordered import duties of 25% on all Canadian and Mexican products, only to delay that plan for 30 days. He also brought in new US levies of 10% on all Chinese goods coming into the US, prompting retaliation from China.
A tariff is a domestic tax levied on goods as they enter a country, proportional to the value of the import.
The prospect of higher tariffs being introduced on imports to the US has been concerning many world leaders because it will make it more expensive for companies to sell goods in the world’s largest economy.
The taxes are a central part of Trump’s economic vision. He sees them as a way of growing the US economy, protecting jobs and raising tax revenue.
But there are also concerns about the effect in the US, where many manufacturers inside the US use steel and aluminium in their products and now face the likelihood of added costs.
Industry groups from construction to can-makers warned about the hit.
In Trump’s first term, the tariffs, despite many exemptions, raised the average price of steel and aluminium in the US by 2.4% and 1.6% respectively, according to the US International Trade Commission.
Stephen Moore, who advised Trump’s campaign on economic issues in 2016 and is currently a senior fellow at the Heritage Foundation, a conservative thinktank based in Washington, said he did not think tariffs on steel and aluminium were an effective way to create jobs, noting the experience of the first term.
He said while Trump was “deadly serious” about trade, he thought the plan was “about getting the rest of the world’s attention”.
“Just about everything Donald Trump does in Washington is a negotiating tactic,” he said.
Trump officials said the latest moves were aimed at stopping countries such as China and Russia from avoiding tariffs by routing low-cost products through other countries.
The US president said he was introducing new standards that require steel to be “melted and poured” and aluminium to be “smelted and cast” in North America.
Nick Iacovella, a spokesman for Coalition for a Prosperous America, which represents steel-makers and supports the tariffs, said his group is most concerned about a surge of steel imports from Mexico, above levels agreed in 2019.
But he noted that Canada sends far more goods to the US than it imports – a trade deficit that has been a key issue for Trump.
“There are still imbalances with the Canadian and United States trading relationship that should be addressed,” he said.
He added: “I don’t think they’re planning to take a one-size-fits-all hammer approach to this, but I think early on, at the beginning at least right now, I do think what the president is saying … [is] both of those countries [Canada and Mexico] are abusing their relationship with the US and we’re going to do something about it.”
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