Tariffs on Steel and Aluminum Take Effect
President Donald Trump’s new 50% tariffs on most imported steel and aluminum kicked in Wednesday, coinciding with his deadline for trading partners to submit their best offers to avoid these new import taxes next month.
On Tuesday, Trump signed a declaration enforcing the tariffs he initially announced last week. Previously set at 25% to 50%, the tariffs were raised as of 12:01 AM.
White House economic adviser Kevin Hassett mentioned during a steel industry meeting on Tuesday that while the initial 25% tariffs were beneficial, further support was necessary, hence the increase.
Almost all trading partners will face these increased tariffs, except for the UK, which reached a limited trade agreement with the US during a 90-day pause on tariffs. Steel and aluminum imports from the UK will maintain a 25% tax until at least July 9.
Seeking Optimal Offers Before Tariff Deadlines
About a quarter of the steel used in the US is imported, and the impact of the tariff hike will notably affect strong trading allies like Canada and Mexico, which rank as the first and third largest sources respectively.
As the leading aluminum exporter to the US, Canada’s Prime Minister Mark Kearney stated that the country’s team is actively negotiating for the removal of these tariffs.
Meanwhile, Mexico’s Economy Minister, Marcelo Ebrard, emphasized that these tariffs are both unsustainable and unjust, particularly since Mexico imports more steel than it exports to the US.
“It makes no sense for the US to impose tariffs on products that are in surplus,” he added, noting that Mexico will pursue an exemption from the tariff increase.
The US currently sources about half of its aluminum from abroad.
Economic Growth Projections Lowered Due to Tariff Increases
This week, the steel and aluminum markets have experienced quite a shock, with aluminum prices more than doubling this year. However, without sufficient domestic production capacity, import levels may remain stable unless prices rise significantly.
The White House expects partners to submit proposals by Wednesday that might help them evade Trump’s forthcoming “liberation day” tariffs.
Since announcing a tariff suspension, there have been ongoing discussions with various countries, but the agreement with the UK has been the sole definitive one, and it’s only a preliminary framework for further talks.
Now, the Trump administration aims to finalize more agreements within the next five weeks before the tariffs actually take effect.
US trade officials have reached out to countries to list their best proposals, covering key areas like tariffs, commitments to purchasing US industrial and agricultural products, and plans to address non-tariff barriers.
Japan, a major trading partner for the US, has not yet received such a letter, according to government spokesman Yoshimasa Hayashi, who mentioned that negotiations over US tariffs are ongoing and will be prioritized.
