As part of his trade policy reforms, US President Donald Trump announced plans to impose a 25% tariff on all steel and aluminum imports into the United States. This policy will affect all countries, including major trading partners such as Canada and Mexico. The announcement coincided with China’s recent implementation of retaliatory tariffs, which were declared earlier in response to US trade actions.
Separately, additional tariffs have been implemented targeting various goods worth $14 billion. These include a 15% tax on coal and liquefied natural gas (LNG), as well as a 10% tariff on crude oil, farm equipment, and certain automobiles.
Trump’s new tariff policy on China
Trump said he would announce fresh reciprocal tariffs later this week that would target imports from a variety of nations that impose taxes on US exports, in addition to the penalties on steel and aluminum items. Trump’s trade policy, aimed at reducing US inflation and targeting major trading partners, has sparked concerns about international currency markets and the potential for increased US inflation. Trump offered them a 30-day reprieve last week, only hours after imposing 25% tariffs on goods from US neighbors Canada and Mexico. However, Beijing retaliated for the administration’s push to impose 10% tariffs on Chinese imports, which went into force on Sunday, February 9, 2025.
The use of US steel mill capacity has decreased recently, and former President of the US, Joe Biden has expanded these quotas to include Britain, Japan, and the European Union. The new tariffs will be added to the current charges on steel and aluminum, according to White House spokesman Karoline Leavitt.
Trump’s tariff implementation has drawn a lot of criticism, caused erratic market movements, and raised concerns about more. Beijing has been quiet in its response, with the exception of filing a protest with the World Trade Organization. China was ready for Trump’s tariffs, which are significantly lower than the amount he had warned about during the election campaign.
Some past tariffs on iron and aluminum
The top exporters of steel products to the United States are Canada, Brazil, South Korea, Mexico, and Russia. For aluminum imports into the US, key suppliers include Canada and Russia. Trump’s planned tariffs on steel and aluminum could potentially impact these major trading partners significantly. Some US trade unions and domestic producers have supported tariffs on imports of metals, but they run the danger of increasing input costs for many US firms. In 2023, the United States exported $43.3 billion worth of steel and iron and $14.3 billion worth of aluminum, while importing $82.1 billion worth of steel and iron and $27.4 billion worth of aluminum.
“We will react to protect the interests of European businesses, workers, and consumers from unjustified measures,” the European Commission said in response to Trump’s pledge of steel and aluminum tariffs. The commission also stated that it has not been formally notified of any new duties. During his first term, Trump targeted the metals industry by enacting a 25% steel and 10% aluminum tax. He later granted exemptions to several trading partners, including Canada and Mexico.
Dollar rises with Trump’s tariff policies
In the past 2018, when the US imposed metal tariffs on the EU, in return, the EU also implemented tariffs on various products of the US, including Borbon whiskey, and Harley-Davidson motorcycles. Later, Joe Biden and the EU came to a deal that replaced the tariffs with a quota system, but it also permitted the application of tariffs this year if negotiations between the parties were unsuccessful.
In comparison with the pound, euro, and yen, the dollar increased by 0.1% after Trump’s current metal tariffs plan. Aluminum prices have grown by 0.4% to $2,639 per ton on the London metal exchange. On the other hand, the Kospi benchmark index led down South Korean shares, including steelmakers Hyundai Steel and Posco Holdings. These shares hit 2% and 0.8% respectively.
Trump has long lamented that the EU’s 10% vehicle import tariffs are significantly higher than the US’s 2.5% rate. Although he regularly complains that Europe “won’t take our cars,” millions of them are shipped west across the Atlantic each year.
Trump has also called for taxes on Taiwan’s semiconductor sector, which he has accused of stealing US business on numerous occasions without providing any proof. Taiwan now seems to be rushing to stop it from occurring. Senior economic officials will travel to the United States this week to speak with their counterparts. To lessen Taiwan’s trade surplus, a major justification given by Trump for imposing tariffs, the government and state-owned petroleum businesses in Taiwan are moving to purchase more US gas and oil.
