2 days ago
Higher U.S. Tariffs on Steel and Aluminum Imports Take Effect
EDITORS NOTE: EDS: SUBS to expand and revise throughout; SUBS headline; ADDS Mega to contributor line; UPDATES list of related stories. NOTE: Story first moved today at 12:52 a.m. ET.); (ART ADV: With photo.); (With: U.S.-MANUFACTURING-OUTLOOK, TARIFFS-BRITAIN, CHINA-MINERALS-SMUGGLING); Ana Swanson reported from Washington, and Ian Austen from Ottawa, Ontario. Emiliano Rodríguez Mega contributed reporting.
WASHINGTON -- U.S. tariffs on steel and aluminum imports doubled Wednesday, as President Donald Trump continued to ratchet up levies on foreign metals that he claims will help revitalize American steel mills and aluminum smelters.
The White House called the increased tariffs, which rose to 50% from 25% just after midnight Eastern time, a matter of addressing "trade practices that undermine national security." They were announced during Trump's visit to a mill run by U.S. Steel last week, and appear to be aimed at currying favor with steelworkers and the steel industry, including those in swing states like Pennsylvania, where U.S. Steel is based.
The higher levies have already rankled close allies that sell metal to the United States, including Canada, Mexico and Europe. They have also sent alarms to automakers, plane manufacturers, homebuilders, oil drillers and other companies that rely on buying metals.
In an executive order, Trump said the higher tariffs would "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."
Kevin Dempsey, the president of the American Iron and Steel Institute, an industry group, praised the move. He said China and other countries oversupplied the international market, making it harder for U.S. producers to compete.
"Given these challenging international conditions that show no signs of improvement, this tariff action will help prevent new surges in imports that would injure American steel producers and their workers," Dempsey said.
But companies that use steel and aluminum to make their products criticized the tariffs, saying they would add costs for American consumers.
Robert Budway, the president of the Can Manufacturers Institute, said doubling the steel tariff would further increase the cost of canned goods at the grocery store.
"This cost is levied upon millions of American families relying on canned foods picked and packed by U.S. farmers and can makers," he said.
The increase Wednesday is the latest in a mounting array of import taxes Trump has announced since returning to the Oval Office in January, including the 25% tariff on steel and aluminum in March. Taken together, the president's trade tactics have increased concerns of a global downturn and heightened corporate America's worries about the cost of doing business.
Economists have pointed out that tariffs on factory inputs such as metals risk slowing U.S. manufacturing, since they raise prices for factories. By adding to the cost of making cars, drilling for oil and building data centers, higher steel tariffs could slow other goals of the Trump administration.
An economic analysis published by the U.S. International Trade Commission, an independent, bipartisan government agency, suggested that while the steel and aluminum tariffs levied in Trump's first term helped American steel and aluminum producers, they hurt the broader economy by raising prices for many other industries, including automaking.
U.S. unions and major companies like Cleveland-Cliffs and U.S. Steel, which have significant lobbying networks, have argued that tariffs are necessary to keep them in business. After struggling financially for years, U.S. Steel agreed in late 2023 to be acquired by Nippon Steel of Japan, though Trump will make the final call on whether the merger can go through.
Foreign governments have bristled at the idea that their steel exports are a national security threat to the United States, in part because American demand for the metals far exceeds the country's current ability to produce them.
Canada is the largest foreign supplier of both steel and aluminum to the United States. Mexico, Brazil, South Korea and Germany are major suppliers of steel, while the United Arab Emirates, China and South Korea provide the United States with small amounts of aluminum.
On Wednesday, President Claudia Sheinbaum of Mexico called the increased tariffs an unjust order with no legal basis. She also warned that her country could react next week with its own measures.
"We disagree with it, we don't think it's fair or sustainable because it makes everything more expensive," she said, adding that Mexican officials are set to meet with their U.S. counterparts to negotiate a deal. "If this is not achieved, then we will also be announcing some measures that we must necessarily take to protect and strengthen jobs. It's not a matter of revenge or retaliation."
Mexico's steel trade with the United States has historically shown a deficit, meaning Mexico imports more steel than it exports.
On Tuesday, Marcelo Ebrard, Mexico's economy minister, said the country would demand to be spared from the latest tariffs. Britain was granted an exemption from the steel and aluminum levies as part of a preliminary deal struck with the U.S. last month, and it remains to be seen if other countries receive similar treatment as part of trade deals.
Canada, which is both the largest exporter of steel to the United States and the largest importer of American steel, followed the initial 25% tariff from Trump with a retaliatory tariff. But to allow manufacturers to adjust and find new sources of supply, it suspended the tariffs' start until October.
Some Canadian steel manufacturers have said they believe overseas producers are now selling steel once intended for the U.S. market in Canada at unfairly low prices.
Prime Minister Mark Carney said Wednesday that Canada would not respond immediately to the escalation. "We are in intensive discussions right now with the Americans on the trading relationship," he said, adding: "Those discussions are progressing."
Unifor, Canada's largest private sector union, was among the groups that called for immediate retaliation Wednesday. They were joined by Doug Ford, the premier of Ontario, the province with the three largest Canadian steelmakers.
"We can't sit back and let President Trump steamroll us," Ford told reporters in Toronto. "Every single day that it goes by gives uncertainty through the sectors, it adds additional cost on the steel. So we need to react immediately."
Catherine Cobden, the president of the Canadian Steel Producers Association, a trade group, said in a statement that doubling the tariff on imported steel "essentially closes the U.S. market to our domestic industry."
The previous 25% tariff on steel already had an effect on Canada's producers. The steel association estimates that since the tariff took effect in March, steel shipments to the United States from Canada have fallen 30%.
"Steel tariffs at this level will create mass disruption and negative consequences across our highly integrated steel supply chains and customers on both sides of the border," Cobden said.
The Aluminium Association of Canada said in a statement Tuesday that the expanded tariff "makes Canadian exports to the U.S. economically unviable" and that "the industry may be forced to diversify trade toward the European Union."
Electricity accounts for about 40% of the cost of smelting aluminum, and the trade group estimated that replacing Canadian aluminum with American production would require the expansion of U.S. power generation equivalent to four Hoover Dams.
"The Canadian industry supports the U.S. goal of increasing domestic aluminum production capacity from 50% to 80%," the group said. "Punitive tariffs do not create the certainty needed for long-term, capital-intensive investments. Even with higher domestic output, the U.S. will continue to rely on substantial aluminum imports."
Industry analysts have said the U.S. tariffs have not significantly curbed shipments from Canadian aluminum mills. The U.S. aluminum industry is too small to significantly replace imports from Canada without expansion and investment.
Century Aluminum, a U.S. aluminum maker, said last year that it would build the first new aluminum smelter in the United States in half a century, doubling domestic production. But the United States would remain dependent on imports for most of its aluminum.
This article originally appeared in The New York Times.
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