With his recent announcement, President Donald Trump has taken big step to reinforce the American steel industry. This week, for example, he approved seemingly Japan’s Nippon Steel’s hostile takeover of US Steel. This was followed by his announcement of plans to hastily impose tariffs on imported steel and aluminum. Under the new formula, those rates will double to 50%. This decision coincides with the larger strategy of rebuilding our domestic manufacturing capacity, lessening dependence on foreign imports.
As expected, Canada and Mexico will bear the bulk of the new tariffs.
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They rank first and third in steel shipment volumes to the United States. Steel imports constitute about 25% of all steel consumed in the U.S. This reality highlights just how important our close American allies are to the U.S. steel market. These new regulations allow the United States to maintain the current 25% tariffs on UK steel and aluminum imports. That’s expected to continue through at least July 9.
Trump signed an executive order formalizing this tariff increase, stating that it “will more effectively counter foreign countries that continue to offload low-priced, excess steel and aluminum in the United States market and thereby undercut the competitiveness of the United States steel and aluminum industries.” The administration’s stated intent with these tariffs is to no longer let other countries steal American jobs and harm American industries.
The announcement has already received a cautious welcome and outright derision from across the Pacific and Atlantic Oceans. Marcelo Ebrard, Mexico’s economy minister, expressed concerns over the fairness of the tariffs, stating, “It makes no sense for the United States to levy a tariff on a product in which you have a surplus.” Importantly, this announcement highlights Mexico’s extraordinary status in this regard, meaning importing more steel from the U.S. than it exports to it.
The government of Canada — the home country of many softwood lumber producers — is suing to get relief from these tariffs. The office of Prime Minister Justin Trudeau indicated that Canada is “engaged in intensive and live negotiations to have these and other tariffs removed.” The presence of such an ongoing dialogue is a testament to the seriousness of the trade relationship between Canada and the United States.
Maroš Šefčovič, the EU’s trade commissioner, is due to meet with U.S. Trade Representative Katherine Tai in Paris. Along the way, they’ll tackle some of the era’s most pressing issues in our current trade landscape. The European Union is seeking to have those new, higher steel tariffs exempted. Beyond this personnel shakeup, they show a commitment to keeping trade stability flowing, which is key.
Most of the construction industry professionals we’ve talked to agree that moving forward with a 50% tariff would be devastating. Some go so far as to label it “unsurvivable” for exporters. The higher levies would be felt most severely on imports from Canada and Mexico. This raises the specter of potentially retaliatory measures that would only serve to further burden cross-border trade.
Unfortunately, we don’t have the same good news when we look at American manufacturing in the face of President Trump’s trade war with our trading partners. He remarked, “Our steel and aluminum industries are coming back like never before,” signaling his administration’s commitment to revitalizing these sectors.