On March 12, 2025, the United States began enforcing a 25% tariff on steel and aluminum imports, fulfilling a promise made by the White House despite efforts by various countries to avoid the levies. These tariffs are expected to increase production costs for products such as home appliances, automobiles, and beverage cans, potentially raising consumer prices.
Clark Packard, a research fellow at the Cato Institute, noted that these tariffs could quickly lead to higher prices across various industries, with sectors like auto manufacturing and construction particularly affected, as they are heavy users of steel.
In response, the European Commission announced it would implement countermeasures against the U.S. beginning April 1, labeling the tariffs as “unjustified trade restrictions.” Ursula von der Leyen, the European Commission president, stated that the EU’s counteractions would mirror the value of the U.S. tariffs in euros.
Since returning to office, President Donald Trump has imposed substantial tariffs on key trading partners, including Canada, Mexico, and China, with partial rollbacks for Canada and Mexico. The latest tariffs hit Canada particularly hard, as it supplies a significant portion of U.S. steel and aluminum imports. Brazil, Mexico, the UAE, and South Korea are also major suppliers to the U.S.
The new tariffs come on top of earlier ones, meaning steel and aluminum products from Canada and Mexico could face tariff rates as high as 50%, unless they comply with the US-Mexico-Canada Agreement (USMCA). This uncertainty has led to volatility in financial markets, with Wall Street indexes falling for the second consecutive day on March 11, 2025.
Despite these market reactions, Trump has downplayed concerns, asserting that he does not foresee an economic downturn and dismissing the stock market losses.
Trump’s trade decisions have caused significant disruptions, with the President briefly threatening to increase the tariff rate to 50% on Canadian steel and aluminum just before the tariffs were set to take effect. Tensions flared when Ontario imposed an electricity surcharge on three American states in retaliation for previous U.S. tariffs. However, after negotiations, Ontario reversed its decision, and further talks are scheduled between U.S. and Canadian officials in Washington on March 13.
White House spokesperson Kush Desai described the trade situation as a “negotiation” and a “transition,” acknowledging that it could be a “bumpy” process.
Before the tariffs were enforced, U.S. manufacturers had already been looking for domestic suppliers to minimize costs, with some even benefiting from the protectionist measures. However, others warn that these tariffs could lead to higher costs for both imports and domestic goods, ultimately driving up prices for consumers.
EY’s chief economist, Gregory Daco, pointed out that the new tariffs are more extensive than those implemented in 2018, affecting both raw and finished products, with higher rates on aluminum imports. The added restrictions are expected to increase sourcing costs for various industries.
Despite lobbying from countries like Australia and Japan for exemptions, no such relief was granted. Australian Prime Minister Anthony Albanese condemned the tariffs as “entirely unjustified” but stated that his country would not retaliate. It remains unclear whether Trump will offer any concessions or strike new deals, as he did during his first term.
Looking forward, Trump has pledged additional reciprocal tariffs starting April 2, targeting trade practices he deems unfair. This could lead to more industries and countries being impacted.
AFP
