CNN
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President Donald Trump on Monday imposed a 25% tariff on all steel and aluminum imports into the United States with no exceptions or exemptions.
Although the United States gets most of its steel from Canada, Brazil and Mexico, the tariffs are largely — albeit indirectly — aimed at China.
“This is a big deal — making America rich again,” Trump said in announcing the tariffs, according to a pool report.
America imports very little steel directly from China, by far the world’s largest producer of steel. Steel tariffs of 25% launched in Trump’s first administration and continued by former President Joe Biden resulted in American importers shifting to other sources.
Yet Chinese steel does make its way into the United States secondhand. Some is purchased by foreign countries and reshipped to the US. And some of it is mislabeled and resold through various channels.
The United States is not the manufacturing-focused economy it once was, but it still consumes tens of millions of tons of steel and aluminum a year. Steel is a key component of everything from consumer goods such as cars and appliances to such large scale infrastructure projects, such as skyscrapers, oil rigs and pipelines, bridges and roads. Aluminum also is a key components of such goods as cans of food and beverages, cars and commercial jets, as well as and key infrastructure such as high power electrical lines.
Tariffs could increase the cost of production of many if not all of those items because of the increased cost of the imported and domestic steel – and aluminum makers could raise the price of their products because of the reduced competition from low-priced imports.
The weight and cost of shipping steel and aluminum have always given domestic producers something of a edge on import sources. American steel mills produce about three times as much steel as is imported here.
When the Trump administration put tariffs of 25% on steel and 10% on aluminum in place in 2018, it briefly cut imports and increased domestic production. But many customers of imported steel and aluminum still found it necessary to import those goods from lower priced producers elsewhere. Those actions also ignited a trade war that hit American goods with retaliatory tariffs that raised prices on other items for consumers.
Some buyers who had been purchasing steel from countries hit with tariffs, such as China, shifted to steelmakers in other markets, such as Canada, which is now the largest source of American steel imports with about 23% of the steel shipped here. China has fallen to 10th place, with less than 2% of steel exports here.
Steel imports fell by 10.2 million tons, or 27%, between 2017, the year before the tariffs, and 2019, according to analysis of government data provided by the American Iron and Steel Institute, an industry trade group. Domestic steel production rose, but only by 6.8 million tons, or 7.5%.
The boost in domestic steel production proved short lived. Both domestic production and imports fell in 2020 as the pandemic cut the demand for steel greatly. While it has come part of the way back since then, domestic production has still not reached the pre-tariffs level of 2017, let alone the pre-pandemic output.
A Trump administration official said the new tariffs on steel, though holding at 25%, were designed to eliminate loopholes and numerous exemptions that have led some importers to game the system. For example, the official said some countries will import semifinished steel, make it into a slightly more finished product, and ship that to the United States to skirt tariffs.
While aboard Air Force One on Sunday, Trump told reporters he was planning the steel and aluminum announcement and that he intended to hold a news conference this week to introduce new reciprocal tariffs.
Just last week, Trump imposed a 10% tariff on all Chinese imports to the US, adding to existing tariffs on China. In retaliation, China quickly imposed tariffs on certain chips and metals.
Trump has, however, started easing some of these measures, including pausing tariffs on goods valued at $800 or less coming into the US until the Commerce Department can develop a tracking system. He has also suspended his 25% tariffs on imports from Mexico and Canada until at least March 1.
This story has been updated with additional context and developments.
