President Donald Trump has reignited international trade tensions by imposing a 25% import tax on all steel and aluminium entering the United States. As the world's largest importer of steel, the US sources these essential materials predominantly from Canada, Brazil, and Mexico. This new tariff order, announced recently, is projected to significantly impact trade dynamics, particularly with Canada, which accounted for more than 50% of aluminium imports to the US last year.
The introduction of these tariffs aims to bolster domestic production, according to President Trump. However, they will inevitably raise the costs of importing steel and aluminium into the country. The US International Trade Commission previously reported that tariffs have contributed to a 2.4% increase in the average price of steel and a 1.6% rise in aluminium costs within the US market. As a result, many American manufacturers relying on these imports now face the likelihood of increased expenses, which could lead to higher prices for consumers.
The most significant blow is expected to fall on Canada, which exports a substantial portion of its steel and aluminium production to the US. The trade deficit between these two countries remains a contentious issue, with Canada sending more goods to the US than it imports. Reflecting on the current situation, Kody Blois, a leading MP from Canada's governing Liberal Party, expressed concern:
"This is completely upending what has been a very strong partnership," – Kody Blois.
Additionally, this development mirrors previous actions taken by the current administration. In 2018, President Trump imposed similar tariffs but later negotiated carve-outs with countries like Australia, Canada, and Mexico. This reprise of past strategies has drawn attention from economists and politicians alike. Douglas Irwin, an economics professor at Dartmouth College, noted:
"This is sort of a replay of 2018," – Douglas Irwin.
The backlash from this decision has been swift and widespread. International partners and US businesses dependent on these imports have voiced significant concerns. Canadian officials have even discussed possible retaliatory measures in response to the tariffs. Meanwhile, economists have warned that these tariffs could lead to broader job losses within the manufacturing sector, estimating potential losses of up to 75,000 jobs.
Nick Iacovella, spokesman for the Coalition for a Prosperous America, highlighted issues in the trading dynamics between the two nations:
"There are still imbalances with the Canadian and United States trading relationship that should be addressed," – Nick Iacovella.
Iacovella further elaborated on the administration's perspective:
"I don't think they're planning to take a one-size-fits-all hammer approach to this, but I think early on, in the beginning at least right now, I do think what the president is saying… [is] both of those countries [Canada and Mexico] are abusing their relationship with the US and we're going to do something about it." – Nick Iacovella.