Former President Donald Trump has taken a hard turn on trade policy. He called for a startling 50 percent increase in tariffs on steel and aluminum imports. He says he is doing so to protect what he sees as key American industries. He claims national security as his impetus for doing so. In a recent press conference, administration officials unveiled the new tariffs. Naturally, this announcement has drawn immediate and widespread condemnation, particularly from Europe — and most of all from the UK — which stands to be most severely affected.
Unsurprisingly, Trump opened his first term imposing a 25 percent tariff on steel and a 10 percent tariff on aluminum. Under the auspices of his authority under Section 232 of the Trade Expansion Act of 1962, he took this action. He explained that these actions were critical to preserving the future of the American steel industry. Indeed, Trump’s administration at one point boasted these tariffs had produced about 1,000 new jobs in the steel industry. But critics quickly homed in on one huge drawback. These shortsighted changes resulted in the immediate loss of approximately 75,000 jobs across many industries, especially manufacturing and construction.
In March, Trump doubled down on this positioning by eliminating carve-outs for countries like South Korea, Brazil, and Argentina that have traditionally enjoyed exemptions. Perhaps most notably, he flagged his disappointment with what he perceived to be a deterioration in protections against these carve-outs. In retaliation, Canada and the European Union drafted their own retaliatory tariffs on American exports.
“It’s been a huge scramble,” one industry source about the lack of clarity on the new tariffs told us.
The consequences of the 50 percent tariff will be felt in all sectors of the economy. Already, prices are projected to go up, as companies will be forced to deal with higher prices on imported components. Instead, economists are telling us to get our act together in order to avoid some serious economic retribution. Indeed, steel imports were already down 17 percent in April from March.
The United States is the world’s largest steel importer, followed closely by the European Union. It only brings in steel from Canada, Brazil, Mexico, and South Korea. Fossil fuel interests rejoice. While Trump’s announcement might sound like good news for U.S., it applies new pressure on the British government to seal its own trade pact with the US. A 50 percent tariff would be the death knell for UK exports to the US. In fact, these exports make up nearly 7 percent of the United Kingdom’s entire trade.
Chad Bartusek, director of supply chain management at Drill Rod & Tool Steels, said he was very angry about being blindsided by the new tariffs. His business imports 800,000 pounds of Austrian–made steel each year that conforms to specifications not made in the domestic market. Bartusek said in an interview, “I woke up Saturday morning and looked at the news. My jaw just dropped! This reaction goes to show the shockwaves this landmark decision have sent across the entire industry.
Trump has repeatedly asserted that further increasing tariffs on imports would serve to protect American workers and industries. Critics counter that these measures would raise domestic production costs. Economist Erica York noted that tariffs on intermediate inputs, such as steel and aluminum, are especially harmful. She observed that in her industry, these tariffs raise production costs in the United States by 30% to 50%.
Gareth Stace, director of UK Steel, emphasized that “the introduction of 50% tariffs immediately puts the shutters up,” indicating the potential halt in business operations due to unsustainable costs.
Global markets are still reacting to Trump’s most recent tariffs. As Olof Gill said, “We’re negotiating hard to try and make the best deals possible.” This testifies to the real work that remains needed to address the damage done by these changes.