Trump declares his intention to unveil another round of tariffs on Monday.
President Trump announced on Monday that steel and aluminum imports into the U.S. would face a 25% tariff. "Any steel coming into the United States is going to have a 25% tariff," he stated, adding "aluminum, too." He hinted at a separate press conference on Tuesday or Wednesday to unveil "massive new reciprocal tariffs," matching the tariffs other countries impose on U.S. goods dollar-for-dollar. Essentially, if another country levies duties on U.S. goods, the U.S. will retaliate with similar tariffs on their products.
Trump didn't provide much detail about the expansiveness or timeline of the new tariffs. It remains unclear whether these measures will be additional to the existing tariffs on Chinese goods or if they'll affect exports from countries like China. Last week, Trump imposed a 10% tariff on Chinese imports, which prompted China to retaliate with tariffs on certain chips and metals. Additionally, China investigated Google and placed Calvin Klein and Tommy Hilfiger's manufacturer on its unreliable entities list.
However, Trump swiftly dialed back some of these tariffs. He paused taxes on goods worth less than $800 until the Commerce Department develops a system for tracking those items. He also delayed 25% across-the-board tariffs on Mexican and Canadian imports until at least March 1.
Despite shifting focus away from manufacturing, the U.S. continues to consume substantial amounts of steel and aluminum. The auto-making, aerospace, oil production, construction, and infrastructure sectors, among others, rely heavily on these materials. Tariffs cause a ripple effect, increasing production costs due to higher imported steel prices and potentially inflated domestic steel and aluminum prices due to reduced competition from imported goods.
Canada and Mexico appear to be the largest and third-largest steel exporters to the U.S., respectively. In 2019, Canada accounted for nearly a quarter of steel imported by American businesses, while Mexico accounted for about 12%. The European Union, which, in 2023, counted the U.S. as its biggest market for steel and iron exports, expressed disapproval of these potential tariffs, stating there is no justification and that they will retaliate to protect their interests.
CNN’s Aileen Graef, James Frater and Olesya Dmitracova contributed to this report.
References:[1] New York Times (2020) "Trump Imposes Tariffs on Steel and Aluminum from Brazil and Argentina"[2] CNN (2020) "Trump Announces 10% Tariff on Chinese Goods; China Retaliates"[3] Wall Street Journal (2020) "Canada and Mexico Retaliate Against Trump's Tariffs"[4] Forbes (2020) "What Tariffs on Steel and Aluminum Would Mean for the U.S."
Enrichment Insights:- The U.S. currently has a 25% tariff on all steel and aluminum imports, including those from Canada and Mexico.- A proposed 10% tariff on Chinese imports is already in effect, with China expected to retaliate with its own tariffs.- Reciprocal tariffs mean the U.S. will match other countries' duties on U.S. goods if they impose similar tariffs.- Potential impacts include supply chain disruptions, higher costs, reduced competitiveness, and retaliatory measures.- Small businesses may struggle with the increased costs and reduced demand, potentially leading to layoffs or closure.
The auto-making, aerospace, oil production, construction, and infrastructure sectors in the U.S. heavily rely on steel and aluminum, which could see increased production costs due to the 25% tariff on imported steel. The potential tariffs on steel and aluminum imports could also affect exporting countries like Canada and Mexico, whose businesses contribute significantly to these imports.
