US Enforces 25% Tariff on Steel, Aluminum: Rising Costs Ahead

The United States enforced a 25% tariff on steel and aluminum imports at midnight on March 12, affecting nearly US$150 billion worth of metal-based products. The move eliminates previous exemptions and quotas, expanding the number of downstream products subject to duties, including auto and tractor parts, construction materials, household goods, and industrial machinery components. Canada and Mexico, the two largest suppliers of steel and aluminum to the United States., are expected to be among the most affected. 

Steelmakers and aluminum producers argue that previous exemptions diluted the effectiveness of Trump’s 2018 tariffs, which temporarily boosted domestic metal production. However, industry leaders warn that the latest tariff expansion will increase costs for manufacturers and consumers. Prices for steel and aluminum have already surged, with Midwest hot-rolled steel futures rising over 21% since the policy was announced.

In addition, US businesses fear that the tariffs will drive up costs, delay projects, and reduce competitiveness. Some manufacturers are considering price hikes, while others evaluate reshoring production, a challenging prospect due to higher labor costs in the United States. The full impact remains to be seen, but the move underscores Trump’s broader trade agenda, which includes additional tariff measures set to take effect on April 2.

Trump’s Imposes New Tariffs, Canada and the European Union Swiftly Retaliate

Trump's latest tariff strategy aims to address alleged trade imbalances and strengthen domestic industries but risks sparking a global trade conflict. The European Union, facing higher US tariffs for the first time since Trump returned to office, announced it will retaliate with countermeasures on US exports starting in April. Hours later, Canada announced over US$20 billion in retaliatory tariffs. Trump signaled that the United States would escalate its response to EU and Canadian actions but did not specify a timeline or details. 

Australian Prime Minister Anthony Albanese condemns the tariffs as “unjustified” and harmful to trade relations, but says that Australia would not impose retaliatory measures. Mexican President Claudia Sheinbaum echoed a similar stance, stating that Mexico would wait until April 2 before deciding on a response.

This is not the first time Trump has enacted tariffs. A similar pattern emerged during his first term when the 2018 metal tariffs led to modest gains in domestic production but also drove up costs for vehicles, tools, and machinery. These measures reduced US industry output by over US$3 billion by 2021, according to a 2023 International Trade Commission report.