US to Double Tariffs on Steel and Aluminum to 50%
US President Donald Trump announced plans to double tariffs on imported steel and aluminum from 25% to 50%, effective next week. This move aims to pressure global producers and escalates the ongoing trade war. Since Trump took office, US steel product prices have risen by approximately 16%. The decision is expected to further impact global steelmakers and international trade relations, casting a cloud over the industry.
Unpacked:
Past tariff increases, such as those under Trump in 2018, led to higher steel product prices, reduced consumption, and lower exports. Studies found that the trade war and retaliatory tariffs also reduced wages and aggregate welfare, with net welfare losses for the U.S. economy during 2018–2019.
Countries like the European Union, Canada, and China responded with retaliatory tariffs on U.S. goods after the U.S. imposed steel and aluminum tariffs in 2018. These measures escalated trade tensions and affected international trade relations.
Initially, countries such as Canada, Mexico, the EU, Australia, Argentina, Brazil, and South Korea were temporarily exempted from the tariffs. However, exemptions for many were later lifted, though Australia remained exempt and deals were eventually reached with Canada and Mexico to remove the tariffs.
Doubling tariffs is likely to further disrupt international trade, increase costs for global steelmakers, and prompt retaliatory measures from other countries. This could escalate the trade war, strain diplomatic relations, and lead to higher prices for consumers and manufacturers worldwide.