US Trade Policy Overhaul: Trump Announces New Tariffs on Steel and Aluminium

25% Tariffs on Steel and Aluminium Imports

In yet another major escalation of his trade policy overhaul, US President Donald Trump announced that on Monday, the United States will impose 25 per cent tariffs on all steel and aluminium imports. These new tariffs will come in addition to additional metal duties, expected to be disclosed later in the week.

Reciprocal Tariffs to be Announced Soon

Speaking to reporters aboard Air Force One on Sunday while en route to the NFL Super Bowl in New Orleans, Trump stated that he would announce reciprocal tariffs as early as Tuesday. These tariffs would take effect almost immediately, signaling further protectionist measures in US trade policy.

Impact on Canada, Mexico, and Other Trading Partners

Per official data, Canada, Brazil, and Mexico are the largest sources of US steel imports, followed by South Korea and Vietnam. Meanwhile, Canada remains the largest supplier of primary aluminium metal to the United States, accounting for 79 per cent of total imports in the first 11 months of 2024. Mexico is also a significant supplier of aluminium scrap and aluminium alloy.

Matching Tariff Rates

Trump mentioned he would hold a news conference on Tuesday or Wednesday to provide detailed insights into the reciprocal tariff plan. He first revealed on Friday that he was planning reciprocal tariffs to ensure “that we’re treated evenly with other countries.”

He has frequently criticized the European Union for imposing a 10 per cent tariff on auto imports, which he considers unfair compared to the American car rate of 2.5 per cent. According to Trump, Europe exports millions of vehicles to the US while restricting American auto exports.

However, the United States benefits from a 25 per cent tariff on pickup trucks, a crucial source of revenue for American automakers such as General Motors, Ford, and Stellantis’ US operations.

Global Trade Comparisons and Tariff Implications

According to World Trade Organization data, the US trade-weighted average tariff rate stands at approximately 2.2 per cent, compared to 12 per cent for India, 6.7 per cent for Brazil, 5.1 per cent for Vietnam, and 2.7 per cent for European Union nations. Trump did not specify which countries would be targeted with the new reciprocal tariffs but emphasized that the US would match tariff rates imposed by other countries. “And very simply, it’s, if they charge us, we charge them,” he stated.

Historical Context and Future Outlook

During his first White House term from 2016-2020, Trump had imposed a 25 per cent tariff on steel and a 10 per cent tariff on aluminium. However, he later granted several trading partners, including Canada, Mexico, and Brazil, duty-free quotas. Former President Joe Biden extended these quotas to Britain, Japan, and the European Union. Despite these measures, US steel mill capacity utilization has declined in recent years, potentially influencing Trump’s decision to reinstate tariffs.

With new tariffs on the horizon, the global trade landscape could see heightened tensions, and the impact on international markets remains to be seen.