Trade conflict intensifies with the implementation of Trump's steel and aluminum tariffs
On Wednesday, the United States expanded its tariffs, implementing sweeping 25-percent duties on steel and aluminum imports "with no exceptions or exemptions."
TroibNews 
The United States expanded its tariff measures on Wednesday as broad 25-percent tariffs on steel and aluminum imports came into effect "with no exceptions or exemptions."
This decision reflects the latest escalation in U.S. President Donald Trump's unpredictable trade policies, which have faced criticism, incited retaliatory actions, and unsettled investor sentiment as well as global equity markets.
For example, the overall U.S. stock market has seen a decline of nearly $5 trillion in value over the past three weeks.
In response, the European Commission immediately announced that it would impose counter tariffs on €26 billion worth of U.S. goods starting next month. Close U.S. allies, Canada and the UK, also voiced disapproval of the tariffs, with Canada considering reciprocal actions and British Business and Trade Secretary Jonathan Reynolds stating that "all options were on the table" to protect national interests.
Backfire on the U.S.
This is not Trump's first foray into tariffs on steel and aluminum. In March 2018, during his first term, he enacted a 25-percent tariff on steel and a 10-percent tariff on aluminum to reduce dependence on foreign metals and enhance domestic production. Currently, both steel and aluminum are subject to a 25-percent tariff, raising concerns about potential deeper economic implications.
Saida Litosh, lead metals analyst at the London Stock Exchange Group, underscored the distinctions between Trump’s tariff strategies in his two terms during an interview with Al Jazeera.
She cautioned that the new 25-percent rate could significantly raise costs for U.S. manufacturers that depend on imported aluminum. "There is also the issue of escalation – what will the affected countries do in response? Will they raise retaliatory tariffs, and if so, to what scale?" Litosh remarked, warning that price increases could ultimately impact downstream industries and consumers.
Li Fuyi, an associate researcher at the Institute for Foreign Economic Research under China's National Development and Reform Commission, explained to CMG that Trump's tariff imposition is motivated by multiple factors: reducing the U.S. trade deficit, appealing to voters in Rust Belt states like Indiana and Pennsylvania, where steel and manufacturing historically thrive, and decreasing reliance on foreign steel and aluminum.
However, Li pointed out that despite these protective measures, the U.S. steel industry hasn't succeeded in achieving import substitution. Domestic steel production in 2024 has decreased by nearly 10 percent compared to a decade ago. "The capacity utilization rate of steel mills and global competitiveness are declining, and there is no sign of the manufacturing prosperity Trump promised," Li explained.
Rather than invigorating the economy, Trump's tariff policies have reportedly hindered U.S. economic growth and decreased employment. A study by the Atlantic Council estimated that the 2018 tariffs alone resulted in the loss of 153,054 jobs in the steel industry. Another report by the U.S.-China Business Council indicated that nearly 250,000 Americans lost their jobs due to these tariffs.
Recession fears
The fallout from these "America First" policies has also adversely affected U.S. allies and global economic progress. Data from the U.S. Department of Commerce reveals that the U.S. remains a significant importer of steel and aluminum, with Canada, Mexico, and Brazil among its largest suppliers. These metals are crucial for various sectors, including construction, automotive, machinery, household goods, and electronics.
With the tariffs in place, U.S. businesses importing these materials will incur a 25-percent tax, likely resulting in increased expenses for industries such as aerospace and automobile manufacturing. American companies that depend on steel and aluminum have already alerted that the tariffs may lead to higher prices for their offerings. Capitol Economics forecasts that the annual U.S. inflation rate could soar from 2.9 percent to potentially 4 percent.
Beyond domestic ramifications, there are apprehensions about retaliatory responses from important U.S. trade partners. Canada, for instance, has promised to retaliate swiftly. Litosh warned, "The proposed tariffs risk triggering retaliatory measures from key trade partners and disrupting the North American aluminum supply chain."
Xu Xiangchun, information director of Shanghai Steel Union, commented to CMG that other nations might retaliate by imposing tariffs on U.S. goods or on each other, possibly resulting in substantial disruptions to global trade flows and supply chains.
The damaging effects of tariffs are historically recognized. In 1930, the U.S. enacted the Smoot-Hawley Tariff Act, despite international trade making up only 9 percent of the country's GDP at that time. The act had disastrous consequences, leading to boycotts of American products, personal insults directed at Americans overseas, and widespread international protests. It critically undermined Germany's ability to export its way out of the onerous reparations stipulated by the Treaty of Versailles, intensifying global economic tensions.
As these new tariffs take effect, the world watches with bated breath to see if history might repeat itself, as protectionist policies potentially precipitate a cascade of economic and geopolitical consequences.
Navid Kalantari contributed to this report for TROIB News
This decision reflects the latest escalation in U.S. President Donald Trump's unpredictable trade policies, which have faced criticism, incited retaliatory actions, and unsettled investor sentiment as well as global equity markets.
For example, the overall U.S. stock market has seen a decline of nearly $5 trillion in value over the past three weeks.
In response, the European Commission immediately announced that it would impose counter tariffs on €26 billion worth of U.S. goods starting next month. Close U.S. allies, Canada and the UK, also voiced disapproval of the tariffs, with Canada considering reciprocal actions and British Business and Trade Secretary Jonathan Reynolds stating that "all options were on the table" to protect national interests.
Backfire on the U.S.
This is not Trump's first foray into tariffs on steel and aluminum. In March 2018, during his first term, he enacted a 25-percent tariff on steel and a 10-percent tariff on aluminum to reduce dependence on foreign metals and enhance domestic production. Currently, both steel and aluminum are subject to a 25-percent tariff, raising concerns about potential deeper economic implications.
Saida Litosh, lead metals analyst at the London Stock Exchange Group, underscored the distinctions between Trump’s tariff strategies in his two terms during an interview with Al Jazeera.
She cautioned that the new 25-percent rate could significantly raise costs for U.S. manufacturers that depend on imported aluminum. "There is also the issue of escalation – what will the affected countries do in response? Will they raise retaliatory tariffs, and if so, to what scale?" Litosh remarked, warning that price increases could ultimately impact downstream industries and consumers.
Li Fuyi, an associate researcher at the Institute for Foreign Economic Research under China's National Development and Reform Commission, explained to CMG that Trump's tariff imposition is motivated by multiple factors: reducing the U.S. trade deficit, appealing to voters in Rust Belt states like Indiana and Pennsylvania, where steel and manufacturing historically thrive, and decreasing reliance on foreign steel and aluminum.
However, Li pointed out that despite these protective measures, the U.S. steel industry hasn't succeeded in achieving import substitution. Domestic steel production in 2024 has decreased by nearly 10 percent compared to a decade ago. "The capacity utilization rate of steel mills and global competitiveness are declining, and there is no sign of the manufacturing prosperity Trump promised," Li explained.
Rather than invigorating the economy, Trump's tariff policies have reportedly hindered U.S. economic growth and decreased employment. A study by the Atlantic Council estimated that the 2018 tariffs alone resulted in the loss of 153,054 jobs in the steel industry. Another report by the U.S.-China Business Council indicated that nearly 250,000 Americans lost their jobs due to these tariffs.
Recession fears
The fallout from these "America First" policies has also adversely affected U.S. allies and global economic progress. Data from the U.S. Department of Commerce reveals that the U.S. remains a significant importer of steel and aluminum, with Canada, Mexico, and Brazil among its largest suppliers. These metals are crucial for various sectors, including construction, automotive, machinery, household goods, and electronics.
With the tariffs in place, U.S. businesses importing these materials will incur a 25-percent tax, likely resulting in increased expenses for industries such as aerospace and automobile manufacturing. American companies that depend on steel and aluminum have already alerted that the tariffs may lead to higher prices for their offerings. Capitol Economics forecasts that the annual U.S. inflation rate could soar from 2.9 percent to potentially 4 percent.
Beyond domestic ramifications, there are apprehensions about retaliatory responses from important U.S. trade partners. Canada, for instance, has promised to retaliate swiftly. Litosh warned, "The proposed tariffs risk triggering retaliatory measures from key trade partners and disrupting the North American aluminum supply chain."
Xu Xiangchun, information director of Shanghai Steel Union, commented to CMG that other nations might retaliate by imposing tariffs on U.S. goods or on each other, possibly resulting in substantial disruptions to global trade flows and supply chains.
The damaging effects of tariffs are historically recognized. In 1930, the U.S. enacted the Smoot-Hawley Tariff Act, despite international trade making up only 9 percent of the country's GDP at that time. The act had disastrous consequences, leading to boycotts of American products, personal insults directed at Americans overseas, and widespread international protests. It critically undermined Germany's ability to export its way out of the onerous reparations stipulated by the Treaty of Versailles, intensifying global economic tensions.
As these new tariffs take effect, the world watches with bated breath to see if history might repeat itself, as protectionist policies potentially precipitate a cascade of economic and geopolitical consequences.
Navid Kalantari contributed to this report for TROIB News
