Trump's Sledgehammer, 25 Percent Steel-Aluminum Tariff, Hits US Friends and Foes

WASHINGTON, TUESDAY – United States President Donald Trump announced an increase in import tariffs on steel and aluminum to 25 percent from the previous 10 percent, Monday (2/11/2025). According to the American Iron and Steel Institute, this decision also impacts friendly countries and steel suppliers to the United States, such as Canada, Mexico, South Korea, and Brazil.

"We are being hit by both friends and foes in this matter. Now is the time to restore the glory of American industry," said Trump aboard the presidential aircraft Air Force One when announcing the decision.

The tariff will take effect on March 4, 2025. Initially, Trump stated that the tariff would be applied indiscriminately. However, he later admitted to considering an exemption for Australia. This exemption is being considered because the US has recorded a trade surplus with Australia.

Trump also intends to change all US import tariffs to match the tariff rates of other countries on US products. The rates are on average above 10 percent of the tariffs applied to China, which take effect on Monday. Meanwhile, the planned increase in US tariffs on Canada and Mexico has been temporarily suspended until March 1, 2025.

Canada immediately criticized the US. President and Chief Executive Officer of the Canadian Chamber of Commerce Candace Laing stated that Trump is disrupting global economic stability. "Economic uncertainty will last for a long time," said Laing.

The implementation of new tariffs, which has become Trump's main weapon, also carries the risk of skyrocketing inflation in the US. The increase in prices is feared to be unmanageable by the increase in income earned by US residents.

According to Trump, the implementation of tariff increases will create a fairer situation in international trade and make US factories more competitive. Even if there are painful impacts, such as price increases that consumers and US businesses have to endure, it will only be temporary.

Trump's move is a continuation of his policy, namely the National Security Tariff Number 232 of 2018 to protect the US steel and aluminum industries.

Trump will also impose new North American standards on imported steel and imported aluminum melted and forged in the U.S. to reduce imports of cheap steel products from China. Trump's trade adviser, Peter Navarro, believes the move will help the U.S. steel and aluminum industries strengthen the U.S. economy and national security.

“Steel and aluminum tariffs 2.0 will end dumping practices by other countries, encourage domestic production, and secure the U.S. steel and aluminum industry as a pillar of the U.S. industry that underpins the economy and national security,” Navarro said.

However, from within the US, there are many doubts about the controversial move. "At first glance, the steps taken seem fair. But is the US really benefiting from the various new tariffs?" said Benn Steil, Director of Economics at the Council on Foreign Relations (CFR), a think tank in New York, US.

“Prices for US consumers will rise, there will be retaliatory tariffs from trading partners, jobs will be lost, and competitiveness will decline due to higher production costs,” Steil said.

He reminded that several countries have adopted Trump's approach by implementing various tariffs, under the pretext that the flow of imports is endangering national security. Basically, the implementation of tariffs related to national security issues cannot be challenged in the World Trade Organization (WTO).

Steil added that everything from door frames to alcoholic beverages is subject to import barriers in developing countries on the grounds of national economic security.

At first glance, the tariff hikes would appear to support growth in U.S. steel and aluminum smelting and processing. At the same time, they would push up production costs because the raw materials used to make motor vehicles, home appliances and other products would rise.

MichAuto Director Glenn Stevens Jr. said the auto industry is likely to raise prices in line with tariff increases. Ultimately, soaring prices will lead to lower sales and reduced employment opportunities at U.S. automakers.

“Not much good will come from a sudden rate hike,” Stevens said.

Trump's move has prompted other countries to raise trade barriers in an era of free trade. Steelmakers in Canada have warned of a major upheaval.

Meanwhile, the European Commission said it would protect the interests of European businesses, workers and consumers from unfair measures. French President Emmanuel Macron said in a television interview on Sunday (9/2/2025) that he would confront Trump's measures against the European Union. He added that the US should focus on dealing with China.

German Economy Minister Robert Habeck said tariff hikes and conflicts only create losers. Consultancy Roland Berger said at least 25 percent of European steel exports go to the United States. Britain's Steel Industry Institute said Trump's tariff plans were a major blow.

After Trump previously announced the implementation of tariffs as an economic weapon against China, Mexico, and Canada, the three countries retaliated. China immediately responded by implementing tariffs on coal and gas imports from the United States which took effect on Sunday (10/20/2025).

Chinese Foreign Ministry Spokesperson Guo Jiakun said, Monday (11/2/2025), there are no winners in tariff wars and trade wars.

Of the 29 million tons of steel imported into the U.S. in 2024, less than 2 percent will come from China. However, the White House has stressed that President Joe Biden's four-year tariff exemptions have allowed China and Russia to circumvent exports to the U.S. through third countries.

The University of Michigan's Survey of Consumers in early February 2025 showed inflation rising to 4.3 percent from 3.3 percent in January. However, Trump's Commerce Secretary nominee Howard Lutnick insisted that the tariff hike would bring 120,000 jobs back to the US.

The steel industry added 14,000 jobs when the tariffs were first introduced in 2018. But that was short-lived due to the Covid-19 pandemic in 2020.

Panos Kouvelis, a professor of supply chain economics at Washington University in St Louis, found in a 2018 study that tariffs did not boost growth in the US manufacturing sector.

“It’s basic economics, when prices go up, purchasing power and demand go down,” Kouvelis said, adding that what is needed are incentives, especially in the areas of advanced technology, national security and medicine. (AP/REUTERS/AFP)