Washington: US President Donald Trump has signed an order increasing tariffs on steel and aluminium imports from 25% to 50%. The move, aimed at securing the American steel industry's future, marks the second hike since March.
According to BBC, the tariffs, which came into effect on Wednesday, have raised concerns among businesses relying on imported metals, which are used in various products from cars to canned food. Rick Huether, CEO of Independent Can Co, expressed uncertainty about the long-term impact of the policy, fearing customers might turn to alternative materials due to rising costs and market instability.
The US, the world's largest steel importer after the European Union, sources most of its metal from countries like Canada, Brazil, Mexico, and South Korea. Trump's initial tariffs of 25% on steel and 10% on aluminium were imposed under a law allowing protection of industries vital to national security. However, many imports were initially exempted following trade deals and firm-specific requests. Trump ended these exemptions in March, unsatisfied with the resulting weakened protection.
At a rally at the US Steel factory, Trump emphasized the intent to make tariffs high enough to compel US businesses to source domestically. Despite the intentions, the American Iron and Steel Institute noted little change in import levels and raw steel production rates as of May. However, a 17% drop in steel imports was recorded in April compared to March, with expectations of further declines following the latest tariff announcement.
The policy has prompted retaliatory tariff preparations from Canada and the European Union. Olof Gill, spokesperson for the European Commission, stated ongoing negotiations aimed at resolving the tariff disputes. In the UK, the announcement has pressured the government to finalize a trade deal with the US to mitigate the March tariff impacts. Trade Secretary Jonathan Reynolds expressed satisfaction with ongoing talks to protect UK steel from additional duties.
Gareth Stace, director general of UK Steel, warned that the 50% tariff could significantly impact UK exports to the US, potentially leading to canceled orders. Economists predict rising prices could harm the US economy as well. Erica York from the Tax Foundation highlighted potential job losses, emphasizing the detrimental effect of tariffs on intermediate inputs like steel and aluminium.
Chad Bartusek, director of supply chain management at Drill Rod and Tool Steels, shared concerns over increased costs. His firm, reliant on Austrian steel not produced in the US, now faces a tariff bill of nearly $145,000, double the initial expectations. The tariff hikes have forced his company to raise prices and cut worker hours, illustrating the broader challenges faced by businesses amid the new trade measures.