This week Trump announced 25% tariffs on steel and aluminium being imported into America. Tariffs are taxes applied to foreign goods being imported into a country. Globally the US is the largest importer of goods. The idea is that higher tariffs will encourage domestic producers to ramp up their production as they don't have to compete with cheaper foreign production. However, there is also a chance that the US continues to import goods, and the consumer suffers higher costs.
Trump's tariffs will come into effect on the 12th March. It is a substantial increase as tariffs are currently 10%, thus a 150% increase is a significant shock.
Roughly a quarter of the steel used in the U.S. comes from abroad, with Canada, Brazil, and Mexico as the top suppliers, followed by South Korea and Vietnam. Last year, Mexico and Canada accounted for about 40% of total U.S. steel imports. When it comes to aluminum, nearly half of the U.S. supply is imported. Canada is by far the largest supplier of primary aluminum, making up 79% of total imports as of November 2024. Mexico is also a key supplier, primarily providing aluminum scrap and alloy.
The announcement has been met with backlash. European Commission President Ursula von der Leyen warned that the move would prompt 'firm and proportionate countermeasures,' while Canadian Prime Minister Justin Trudeau vowed to 'stand up for' Canadian workers and businesses.
Some believe the proposed tariffs may not be enforced and are instead being used as a negotiation tactic.
Certain goods will be more affected than others. Canned food and beverages are among the most vulnerable, with Robert Budway, president of the CMI, warning that without exemptions for can manufacturers to import steel tariff-free, grocery prices for U.S.-made canned foods are likely to rise.
'While the president may believe these tariffs protect the steel industry, they are undoubtedly undermining food security and supply resiliency for American canned goods, which millions rely on daily,' Budway said. Coca-Cola has also cautioned that the tariffs will increase costs, potentially leading to higher prices. However CEO James Quincey tried to assure investors this week, 'We control enough variables to adapt and mitigate our way through this'.
Meanwhile, automakers like Ford and General Motors warned that the tariffs could add around $1 billion to their costs.
The construction industry could also face significant challenges. Carl Harris, chairman of the National Association of Home Builders, criticised the tariffs on steel and aluminum, calling them 'totally counter' to Trump's goal of making housing more affordable. He warned that higher costs would deter development and rebuilding.
'Ultimately, consumers will pay for these tariffs in the form of higher home prices,' Harris said. The National Association of Home Builders has urged the administration to exempt building materials from the proposed tariffs.
The impact of steel tariffs is not unprecedented. After Trump imposed similar measures in 2018, appliance maker Whirlpool saw an unexpected $350 million rise in costs, largely driven by increased steel prices.
Financial markets have responded cautiously. In the UK, the FTSE 100 and FTSE 250 both saw slight declines, with industrial metal miners and homebuilders, sectors sensitive to metal prices, experiencing notable losses. This reflects investor concerns over the broader economic repercussions of the tariffs.
The UK government has taken a measured approach, seeking to prevent escalating tensions into a trade war. Prime Minister Sir Keir Starmer plans to visit Washington to negotiate an exemption for UK imports.
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