President Donald Trump has reignited global trade tensions by reinstating full steel tariffs and increasing duties on aluminum imports. The move, aimed at bolstering domestic manufacturing, is expected to shake up industries, strain relations with key allies, and possibly fuel inflation concerns ahead of the 2025 election.
Tariffs Back in Full Force
Trump’s latest decision removes exemptions that had softened the impact of his 2018 steel tariffs. Now, all steel imports will be subject to a 25% tax, and aluminum imports will face a 25% tariff, up from the previous 10% rate.
“We were being pummeled by both friend and foe alike,” Trump said aboard Air Force One, heading to New Orleans for the Super Bowl. “It’s time for our great industries to come back to America.”
The timing of the announcement, just weeks before Super Tuesday, suggests a political calculation. Trump has long touted tariffs as a way to rebuild American industry. But while the measures might benefit steelmakers, manufacturers reliant on steel and aluminum face rising costs.
Trade Allies Caught in the Crossfire
The new tariffs are not just aimed at traditional rivals like China and Russia. Canada, Mexico, Brazil, and South Korea—four of the largest steel suppliers to the U.S.—will all be hit. The Canadian Chamber of Commerce responded swiftly.
“Today’s news makes it clear that perpetual uncertainty is here to stay,” said Candace Laing, the chamber’s president and CEO.
Trade relations with Canada and Mexico had stabilized under the USMCA deal that replaced NAFTA, but Trump’s renewed push for tariffs could strain those ties. The White House argues that prior exemptions allowed Chinese and Russian steel to enter the U.S. market through third countries.
Economic Risks and Market Reactions
Trump insists the tariffs will strengthen domestic industry, but economists warn they could drive up costs for manufacturers and consumers. Inflation, already a pressing concern for voters, could worsen if companies pass higher costs down the supply chain.
Benn Steil, director of international economics at the Council on Foreign Relations, warned of potential consequences.
“The costs to the U.S. will include higher prices for consumers, retaliatory tariffs abroad, and the loss of competitiveness for firms facing rising input costs,” he said.
Stock markets responded with mixed reactions:
- Steel producers surged: Cleveland-Cliffs jumped 13%, U.S. Steel rose 4%, and Nucor climbed nearly 6%.
- Manufacturers declined: General Motors and other automakers, which rely heavily on steel, saw their stock prices slip.
Tariffs’ Impact on Jobs and Industries
Supporters argue that stronger tariffs will create U.S. jobs, but history suggests a more complicated picture. When Trump first imposed tariffs in 2018, the primary metals industry saw an initial gain of 14,000 jobs, only to lose them during the pandemic.
Howard Lutnick, Trump’s pick for commerce secretary, claims the new tariffs will bring 120,000 jobs back to the U.S., though he offered no data to support that figure.
Glenn Stevens Jr., executive director of MichAuto, warned that higher material costs could hurt the auto industry.
“If you look at sudden tariffs to a system, there isn’t a lot of good that comes out of that,” he said, pushing back on Trump’s claims that the move would revitalize auto manufacturing.
Inflation and Consumer Fears
Consumer sentiment is already showing signs of anxiety. The University of Michigan’s latest consumer survey found that inflation expectations for the next year jumped from 3.3% to 4.3%.
The government’s upcoming inflation report is expected to show a 2.8% rise in consumer prices, with tariffs playing a role in driving up costs.
Economists argue that trade policies should be more targeted. Panos Kouvelis, a supply chain expert at Washington University in St. Louis, emphasized that blanket tariffs may do more harm than good.
“Simple economics will tell you if prices go up, demand will go down,” Kouvelis said. “What we need are smart, targeted industrial policies, not general tariffs on everything.”
Trump’s Next Trade Moves
The White House has indicated that more tariffs could be coming, potentially on computer chips, automobiles, and pharmaceuticals. Trump claims that import taxes will eventually lead to increased domestic production, but industry leaders remain skeptical.
The broader economic implications of Trump’s trade policies remain uncertain. For now, businesses, consumers, and global trade partners are bracing for the impact of yet another shift in U.S. tariff strategy.
