Priyanka Tiwari
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President Donald Trump on Monday removed the exemptions from his 2018 steel tariffs, making all steel imports subject to a minimum 25% tax. Additionally, Trump raised aluminum tariffs from 10% to 25%.
Trump Justifies Tariffs as Boost for U.S. Industries
“We were being pummeled by both friend and foe alike,” Trump said while signing two proclamations that revise his first-term trade policies. These new tariffs, set to take effect on March 4, aim to encourage domestic manufacturing by increasing costs for foreign-made products. However, they will also impact key U.S. allies, as the top four steel exporters to the U.S. are Canada, Brazil, Mexico, and South Korea, according to the American Iron and Steel Institute.
Later this week, Trump is also expected to reset U.S. import taxes to align with tariffs imposed by other countries. These changes come in addition to the existing 10% tariffs on Chinese imports, China's retaliatory tariffs, and planned U.S. tariffs on Canada and Mexico, which remain suspended until March 1.
Canada and Industry Experts Criticize Tariff Decision
Canada, the leading source of U.S. steel imports, quickly condemned the move. Candace Laing, president and CEO of the Canadian Chamber of Commerce, described Trump as a destabilizing force in the global economy.
“Today’s news makes it clear that perpetual uncertainty is here to stay,” Laing said.
The tariffs also pose inflation risks at a time when consumers are already struggling with high prices. Trump argues that his trade policies will ultimately strengthen U.S. manufacturing, making domestic factories more competitive. However, critics warn that higher costs on imported goods could negate potential economic benefits.
Economic Experts Warn of Negative Consequences
Benn Steil, director of international economics at the Council on Foreign Relations, expressed concerns about the broader impact of tariffs.
“The costs to the U.S. will include higher prices for consumers, retaliatory tariffs from other countries, and job losses in industries that rely on imported materials,” Steil said in an email.
He also noted that Trump's approach, which justifies tariffs under national security grounds, is encouraging other nations to impose similar trade barriers. Since such tariffs are difficult to challenge at the World Trade Organization, many developing countries have followed suit, introducing new import restrictions on products ranging from door frames to alcoholic beverages.
China’s Minimal Role in U.S. Steel Imports
Despite Trump's trade rhetoric, only about 2% of the 29 million net tons of steel imported by the U.S. last year came from China. However, the White House argues that past exemptions under the Biden administration allowed Chinese and Russian steel to enter the U.S. through third-party countries.
Tariffs to Increase Costs for U.S. Manufacturers and Consumers
While steel mills and aluminum smelters may benefit from the tariffs, manufacturers using these metals to produce cars, appliances, and other goods could face higher costs.
Glenn Stevens Jr., executive director of MichAuto, warned that the auto industry might have to raise prices in response to the tariffs, potentially reducing sales and leading to job losses.
“If you introduce sudden tariffs into a system, there isn’t a lot of good that comes out of that,” Stevens said, challenging Trump’s claims that his policies will create jobs in the auto sector.
Inflation Concerns and Market Reactions
The White House has yet to provide a comprehensive analysis addressing concerns that tariffs will slow economic growth and increase inflation. Officials argue that economic studies fail to account for Trump’s proposed tax cuts and regulatory changes, but the administration has yet to present a budget plan detailing these policies.
Consumers are already anticipating higher inflation. The University of Michigan Survey of Consumers found that year-ahead inflation expectations jumped from 3.3% in January to 4.3% in February.
Economists predict that a government report scheduled for release on Wednesday will show consumer prices rising at 2.8%, indicating that tariffs are a growing concern for households.
Meanwhile, steel company stocks surged on Monday, as investors bet that higher tariffs would boost industry profits. Cleveland-Cliffs, which is attempting to acquire U.S. Steel, saw its stock rise 13% in morning trading, while U.S. Steel shares climbed 4%.
Read More: Trump Calls It a Matter of Shame That Indian Graduates Are Forced to Leave US
