US President Donald Trump has announced that the United States will impose a 25% tariff on all steel and aluminium imports starting Monday, marking a significant escalation in his administration’s trade policy.
Speaking to reporters aboard Air Force One on Sunday while en route to the NFL Super Bowl in New Orleans, Trump also revealed plans for reciprocal tariffs, which he said would be detailed in a press conference on Tuesday or Wednesday.
The decision signals a return to the protectionist trade measures that defined Trump’s first term. During his previous administration, he imposed a 25% tariff on steel and a 10% tariff on aluminium but later granted exemptions to several trading partners, including Canada, Mexico, and Brazil. His successor, Joe Biden, extended these duty-free quotas to the UK, Japan, and the European Union.
A Broader Trade Dispute
Trump has not specified which countries will be affected by the reciprocal tariffs but stated that the United States would match tariff rates imposed by its trading partners. “If they charge us, we charge them,” he said, reiterating his long-standing criticism of what he views as unfair trade practices by other nations.
The move is expected to heighten tensions with key trading partners, particularly the European Union, which Trump has repeatedly criticised for its 10% tariff on automobile imports—significantly higher than the 2.5% tariff imposed by the US on European cars. He has previously claimed that the EU “won’t take our cars” while exporting millions of vehicles to the US market.
Impact on Global Trade
The tariffs are expected to have significant consequences for major steel and aluminium suppliers. According to official trade data, Canada, Brazil, and Mexico are the largest sources of US steel imports, followed by South Korea and Vietnam. Canada is also the primary supplier of aluminium to the US, accounting for 79% of total imports in the first 11 months of 2024. Mexico, meanwhile, is a major source of aluminium scrap and alloys.
The introduction of new tariffs could provoke retaliation from affected countries, potentially triggering a broader trade dispute. The Biden administration had previously sought to ease trade tensions with US allies by negotiating tariff exemptions and quotas, but Trump’s decision reverses this approach.
Domestic Economic Implications
While the tariffs are expected to benefit domestic steel and aluminium producers, they may also lead to increased costs for American manufacturers reliant on these raw materials, including the automotive, aerospace, and construction industries. The US steel industry has experienced declining capacity utilisation in recent years, with manufacturers arguing that foreign competition has undermined domestic production.
Trump’s broader reciprocal tariff plan could have far-reaching implications for various industries, depending on how it is implemented. The US trade-weighted average tariff rate is currently 2.2%, significantly lower than those of key trading partners such as India (12%), Brazil (6.7%), Vietnam (5.1%), and the European Union (2.7%), according to World Trade Organization data.
