On Tuesday, President Trump moved quickly and boldly by signing an executive order. This order substantially increases tariffs on all metals imports into the United States, increasing the effective tariff rate from 25% to 50%. This action is intended to fortify the U.S. steel market. It will do so by limiting the flood of lower cost foreign imports and addressing the impacts of declining global demand. Late last week, state officials released the new, phased-in tariff structure. This amendment is poised to make a dramatic difference to international trade.
The 50% tariff affects every single one of their metal imports indiscriminately. Consequently, the American steel industry would benefit from the protectionist steps taken by the Trump administration. According to U.S. officials, this tariff increase is intended to protect domestic producers of the like product from foreign competition. What worries fabricators even more is the huge wave of low-priced steel products coming into this country from overseas. Germany, Italy, Sweden and the Netherlands are important European countries exporting steel. After all, they will feel the brunt of this increased burden from the new administrative levy.
The top two steel import sources to the U.S., Canada and Mexico, are the U.S.’s largest export destinations. Brazil and South Korea join Japan in playing a key role by supplying steel tons that are sold into the U.S. market. The new tariffs went into effect on July 1st. Producers in all countries will need to reconsider their export strategies in order to be competitive.
Though the tariff increase has created difficulties for most global suppliers, it offers an interesting opportunity for the United Kingdom. The U.K. has so far been granted a temporary stay from the new tariffs. It will nonetheless be hit with a 25% tariff on its steel exports to the U.S. That last trade agreement—the Economic Prosperity Deal—was signed on May 8th of this year. This deal is what prompted the exemption. The U.K.’s historical standing as a major trade partner led it to receive “preferential treatment” over its European neighbors.
The U.K. will have to meet more than just the letter of this agreement in order to keep its preferred status. If satisfactory compliance is not determined within that timeframe, U.S. tariffs on U.K. steel would be subject to a raise to 50% “on or after July 9.” Such an ill-advised escalation would endanger a key trade partnership. Today, this relationship accounts for 7%—about £370 million ($500 million) in 2024—of the U.K.’s total steel exports.
The impacts of these tariffs go far beyond their effect on the international tradesmanship. Increased steel prices resulting from Trump’s tariffs are likely to affect various industries within the U.S., including automakers and manufacturers of canned goods and beverages. Steel prices are climbing – there’s a perfect storm brewing. Companies will have to pass these increased costs onto consumers—jacking up the prices for thousands of commonly purchased products.
Economic experts caution that shielding domestic industries may feel like a salve in the near term. They point out that those very tariffs will raise new operational costs for domestic manufacturers and harm their competitiveness in global markets.
“If no mutually acceptable solution is reached, both existing and additional EU measures will automatically take effect on 14 July — or earlier, if circumstances require,” – EU spokesperson (via CNBC).