Trump's metal tariffs
Are Trump’s steel and aluminum tariffs a good idea? Viewpoints from multiple sides.
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What’s happening
Last week, President Trump signed a proclamation that will impose 25% tariffs on steel and aluminum imports, with few exceptions, starting Mar 12. The move essentially reinstates and expands metal tariffs Trump first imposed in 2018, which had been partially relaxed during his first term and Biden’s presidency. Countries that previously had deals to avoid the duties such as Canada, Mexico, and those in the EU will no longer be exempt.
Trump’s metal tariffs invoke Section 232 of the Trade Expansion Act of 1962, which enables a president to adjust import policy if there is evidence surging imports threatens national security.
The steel and aluminum duties come amid a broader tariff push by Trump, who announced plans this week for a 25% tariff on automobiles (to take effect as soon as Apr 2) and 25%+ tariffs on semiconductors and pharmaceuticals. He had halted implementing sweeping 25% tariffs on most goods from Mexico and Canada earlier this month after securing agreements with both countries on immigration control and drug trafficking.
What are tariffs: Tariffs are essentially taxes on imported goods, paid by domestic importers of materials and products from other countries. They have been used historically to raise government revenue, extract concessions from foreign governments, or protect domestic industries by raising the prices of foreign goods and encouraging consumers to purchase more domestic products. Some economists highlight their potential to pass along higher prices to consumers.
Trump’s steel and aluminum strategy: In addition to removing existing exemptions for allies, Trump’s order extends the 25% duty to a number of downstream products made with foreign steel or aluminum. It also enforces a strict “melted and poured” standard for steel – which prevents unfinished steel from other countries that is simply “finished” in the US from qualifying as US-produced steel.
According to the Trump administration, the strict standards and limited exemptions are intended in part to prevent China and other foreign exporters from circumventing US tariffs through various means. Trump officials also say the measures will help boost US steel and aluminum production to 80% capacity utilization rates, levels they argue are necessary for long-term industry viability and national security.
Trump’s steel and aluminum tariff order has sparked debate over its economic implications and strategic merits. This week, we bring you the viewpoints from multiple sides. Let us know what you think in the comments.
Notable viewpoints
More supportive of Trump’s metal tariffs:
Metal tariffs are necessary to counter China and level the playing field.
Tariffs on imported steel will level the playing field for domestic steel producers against China, which produces roughly 54% of the world’s steel by flooding the global market at prices lower than production costs, undermining manufacturers in the US and other countries. The Chinese government subsidizes its steel manufacturers to enable artificially low prices, a practice that violates fair trade rules of the World Trade Organization (WTO).
Trump’s 25% tariffs on steel and aluminum – without exemptions – will make it harder for China to dodge tariff rules through current tactics such as shipping unfinished steel to Vietnam (a previously exempt country) for final finishing before it is shipped tariff-free to the US or shipping it to Canada or Mexico, where it is refined into other downstream products before being shipped into the US.
Tariffs will boost domestic production and employment.
Higher import prices will boost demand for American-made metal, which will boost domestic production and drive the hiring of thousands of American workers. (Summarized from White House fact sheet.)
Tariffs during Trump’s first term briefly helped increase domestic production utilization above the administration’s 80% target and drove a roughly one-third reduction in imports between 2016-2020. (Summarized from White House fact sheet.) (Note: Third-party data sources specifically cite a 27% reduction in steel imports from 2017-2019.)
“Today is a great day for the US aluminum industry. Unfair trade practices have devastated the domestic aluminum industry and President Trump’s actions today will protect thousands of American workers and their families.” (Mark Duffy, President of American Primary Aluminum Association.)
Tariffs will support the US economy.
The tariffs will not drive significantly higher inflation. Trump’s 2018 tariffs of 7.5%-25% on Chinese goods were found by multiple analyses – including that of the Economic Policy Institute – to not have a significant impact on consumer prices. (Summarized from White House fact sheet.)
Trump’s tariffs, when paired with other measures such as spending cuts, tax reductions, and increased energy production, will not raise prices. Furthermore, the scale of US tariffs will likely force other countries to reduce prices, making many goods cheaper.
A 2024 study by the Coalition for a Prosperous America, a tariff advocacy group, found that a 10% global tariff would generate $728B in economic growth and 2.8M jobs, supporting the case for the steel and aluminum tariffs. (Summarized from White House fact sheet.)
Tariffs will bolster supply chain resilience and national security.
Tariffs will increase the domestic production of steel and aluminum, which are critical inputs into defense infrastructure, making the US more self-sufficient for defense manufacturing and less likely to be caught in short supply or reliant on countries like China in an emergency. (Summarized from White House fact sheet.)
Trump’s sweeping tariffs will serve as bargaining chips to extract concessions from other countries and help the US establish more balanced international trade.
More opposed to Trump’s metal tariffs:
Metal tariffs will hurt domestic manufacturers and employees.
Higher production costs for downstream manufacturing sectors – such as automotive and industrials – that use steel and aluminum as inputs will force manufacturers to raise prices and become less competitive. Trump’s first-term tariffs of 25% on steel and 10% on aluminum wound up hurting employees in downstream manufacturing. For instance, Mid-Continent Steel and Wire – a leading manufacturer of nails in the US – laid off 80 workers after sales suffered from having to charge higher prices. Ford lost $750M in profit in 2018, which it said translated to a reduction of $750 in profit-sharing for every employee.
The new tariffs are likely to trigger retaliatory tariffs from traditional trading partners, weakening exports for domestic manufacturers. The EU, for instance, issued retaliatory tariffs on $2.8B in goods after Trump’s first-term tariffs, which forced companies such as Harley Davidson to relocate parts of their production to avoid export penalties.
The tariffs will benefit way fewer companies and employees than it will hurt. Steelmakers employ about 80,000 people while steel-using industries – which will feel the brunt of the impact of higher prices – employ about 12 million workers.
A 2019 Federal Reserve study found that Trump’s first term tariffs caused a net 0.6% employment reduction in the manufacturing sector, which equates to roughly 75,000 fewer jobs.
Tariffs will hurt US consumers.
Increases in the cost of steel and aluminum – used, for example, in items ranging from soda cans to passenger jets – will lead to higher production costs of many products and drive up prices for consumers.
Economists at the Peterson Institute for International Economics found in 2020 that Trump’s first-term tariffs collectively cost Americans $900,000 for every job they created, an amount that is more than 13x the typical steelworker salary.
The metal tariffs will not bolster national security.
Trump’s steel and aluminum tariffs are likely to drive American trading partners to deepen ties with foreign adversaries such as China, weakening US influence and economic leverage globally.
“No, there’s not a national security justification for steel tariffs. The military uses between 1 and 3 percent of US domestic steel production, so tariffs on steel from every country to protect all of it don’t make sense for defense purposes.” (National Review Editorial Board.)
Trump’s tariffs are largely a political move.
Trump’s move is primarily aimed to appease the steel and aluminum industries, which want tariffs as a way to increase their bottom lines. Domestic steel prices are already roughly 50% higher than pre-pandemic levels and aluminum prices are roughly 30% higher.
Tariffs have been used historically as tools to rally political support among certain voters, which is likely a motivation for Trump. The steel manufacturing constituency is concentrated in regions important to presidential elections with, for example, the United Steelworkers of America headquartered in Pennsylvania.
Be heard
We want to hear from you! Comment below with your perspective on Trump’s steel and aluminum tariffs and we may feature it in our socials or future newsletters. Below are topic ideas to consider.
Do you support or oppose Trump’s 25% tariffs on steel and aluminum? Why or why not?
What are some arguments or supporting points you appreciate about a viewpoint you disagree with?
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