Trump sets 25% tariffs on steel, aluminum as trade war grows

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(Bloomberg) — President Donald Trump ordered a 25% tariff on steel and aluminum imports, escalating his efforts to protect politically important U.S. industries with levies hitting some of the country’s closest allies.

The tariffs will apply widely to all U.S. imports of steel and aluminum, including from Canada and Mexico, the country’s top two foreign suppliers of the metals. The levies, which also include finished metal products, are meant to crack down on what administration officials said were efforts by countries like Russia and China to circumvent existing duties.

Trump cast the effort as one which would help bolster domestic production and bring more jobs to the U.S., and warned that the rate on metal tariffs “may go higher.” The new rates will go into effect on March 4, a U.S. official said.

“Essentially, we’re putting on a 25% tariff, without exception, on all aluminum and all steel, and it’s going to mean a lot of businesses are going to be opening in the United States,” Trump said Monday as he signed the measures in the Oval Office.

While the measures unveiled Monday did not include exemptions for trading partners — and U.S. officials said they were wary of granting any leeway — Trump indicated that he may consider a break for Australia, crediting the country’s import of U.S.-made aircraft.

After-hours movement was muted in shares of the major American steel and aluminum producers. Alcoa Corp., the largest American aluminum producer, gained about 1%, while Nucor Corp., the largest U.S. steelmaker, rose 0.5%.

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Trump’s move comes on top of new 10% tariffs on goods from China; 25% levies on Canada and Mexico that are currently paused; and his plan to slap reciprocal duties on other nations. The president also reiterated his threat to levy reciprocal tariffs against countries that have levies on American imports, saying those could be announced over the next two days. And he said the administration will be looking at levies on cars and semiconductors, as well as other potential sectors.

Escalating Tariffs

The metal tariffs the president approved Monday are the broadest-reaching action yet by Trump to confront U.S. trade deficits and harness international commerce as a source of revenue.

Trump authorized the new tariffs under Section 232 of the Trade Expansion Act, which gives the president broad authority to impose trade restrictions on domestic security grounds. It is the same power that Trump used to levy steel and aluminum tariffs in 2018, during his first term. With his proclamations Monday, he is effectively reviving and expanding those tariffs.

The U.S. saw a bump in manufacturing employment fueled by Trump’s tax cuts early in his last administration. But things started to change after he introduced the steel and aluminum tariffs in March 2018 and also launched a trade war against China. In 2019, the first full year after Trump’s initial steel and aluminum tariffs went into effect, the U.S. actually lost manufacturing jobs and the broader factory sector entered a slump with industrial production falling.

A senior administration official said the new action was necessary because steel and aluminum exporters abused exceptions under the previous policy, which hurt American producers. The official detailed the moves on a call with reporters earlier Monday on condition of anonymity.

—With assistance from Joe Deaux and Akayla Gardner.