Global Trade Reshaping as US Slaps New Tariffs on Steel, Aluminum

Since his inauguration on Jan. 20, Trump has unveiled and paused blanket tariffs on Canadian and Mexican goods over migration and illegal fentanyl, and hiked duties on Chinese imports in the same breath, triggering retaliation.

And on Monday he imposed sweeping steel and aluminum levies, drawing comparisons to his first term when he imposed duties across both sectors before allowing exemptions.

"Today I'm simplifying our tariffs on steel and aluminum," Trump said Monday in the Oval Office. "It's 25 percent without exceptions or exemptions."

In an executive order released after, he said: "As of March 12, 2025, all imports of aluminum articles and derivative aluminum articles from Argentina, Australia, Canada, Mexico, EU countries, and the U.K. shall be subject to the additional ad valorem tariff."

Trump issued a separate order for steel, which said it would apply to all imports from the same countries the aluminum tariffs hit, as well as to Brazil, Japan and South Korea.

Canada and Mexico are the biggest steel importers to the United States, according to U.S. trade data. Brazil and South Korea are also major steel providers.

Trump also signaled he would look at imposing additional tariffs on automobiles, pharmaceuticals and computer chips.

The Republican president had unveiled the policy on Sunday aboard Air Force One while flying to the Super Bowl in Louisiana.

Before he signed executive orders imposing the measures, global stock markets rose as traders with "tariff fatigue" appeared to shrug off Trump's plans.

"President Trump has made it clear that an important part of an America First Golden Age is steel production," National Economic Council Director Kevin Hassett told CNBC.

The U.S. leader said he was considering an exemption for Australia from the steel tariffs, confirming comments made by Australian Prime Minister Anthony Albanese.

"We have a (trade) surplus to Australia, one of the few. And the reason is they buy a lot of airplanes. They are rather far away and need lots of airplanes," he said.

Trump has also promised an announcement on Tuesday or Wednesday on broader "reciprocal tariffs" to match the levies other governments charge on U.S. products.

He imposed sweeping tariffs during his 2017-2021 presidency to protect U.S. industries, which he believed faced unfair competition from Asian and European countries.

  'Losers' 

Canadian steelmakers warned of "massive" disruption, while the European Commission said it would "react to protect the interests of European businesses, workers and consumers from unjustified measures."

French President Emmanuel Macron vowed in an interview aired Sunday to go head-to-head with Trump over his wider tariff threats against the European Union, though he said the United States should focus its efforts on China.

German Economy Minister Robert Habeck said a tariff conflict "only has losers."

Around 25 percent of European steel exports go to the United States, according to consultancy Roland Berger.

Britain's steel industry body called the tariff plan a "devastating blow."

Trump has already shown his fondness for weaponizing the United States' power as the world's largest economy, ordering tariffs on key trade partners China, Mexico and Canada soon after he took office.

He paused 25 percent levies against Canada and Mexico for a month after both countries vowed to step up measures to counter flows of the drug fentanyl and the crossing of undocumented migrants into the United States.

  'Tariff fatigue' 

But Trump went ahead with tariffs on China, the world's second biggest economy, with products entering the United States facing an additional 10 percent levy.

Chinese retaliatory tariffs targeting U.S. coal and liquified natural gas come into play on Monday.

Chinese foreign ministry spokesman Guo Jiakun said Monday that "there is no winner in a trade war and tariff war."

Trump also focused on steel during a visit by Japanese Prime Minister Shigeru Ishiba last week.

The American leader said he had secured an agreement for Japan's Nippon Steel to make a major investment in U.S. Steel, instead of seeking to take over the troubled firm.

Trump, who has promised a "new golden age" for the United States, insists the impact of any tariffs would be borne by foreign exporters without being passed on to U.S. consumers, despite most experts saying the contrary.

But he did acknowledge this month that Americans might initially feel economic "pain" from the levies.

Wall Street's main indices finished up Monday despite the tariff threat. London and Frankfurt set fresh records, while Hong Kong and Shanghai stocks also rose.

"The fact that global equity indices are higher at the start of the week could be a sign of tariff fatigue," said Kathleen Brooks, research director at trading group XTB.

The dollar also rose against the Canadian dollar, the Mexican peso and South Korean won on Monday.

Reshaping global trade

Trump sees tariffs as a way to raise revenue, remedy trade imbalances and pressure countries to act on US concerns.

But "the degree of uncertainty about trade policy has basically exploded," said Maurice Obstfeld, senior fellow at the Peterson Institute for International Economics.

Analysts can try to predict where tariffs might be imposed based on economic variables, he told AFP, but basing trade policy on non-economic objectives could throw things into a tailspin.

Trump's tactics could lead to a "retraction of global supply chains," he warned, or countries seeking to decouple from the US market if risk levels are deemed too high.

Stephen Moore, a longtime external Trump advisor, sees tariffs as a way to "incentivize" countries to act in US interests, saying that partners like Canada, Mexico and China risk bigger losses economically than the United States.

While he believes Trump's approach has been effective, he conceded it could be dangerous if it triggered escalating trade tensions with partners like Canada.

Similarly, Washington would want a "strong and stable economy in Mexico," added Moore, a senior visiting fellow at The Heritage Foundation.

Inu Manak, a fellow for trade policy at the Council on Foreign Relations, warned that Trump's tariffs could backfire.

Besides threatening tit-for-tat tariffs, Canadians also offered a "cultural response," with people booing the US national anthem at sporting events, she said.

"This is really damaging the United States' reputation, and I think that's something we need to be concerned about in the long term," she said.

To McDaniel, the risk of unilateral tariffs may upend global trade.

"What is the use of WTO membership when one of the biggest countries in the world can threaten tariffs for national security reasons in such an aggressive way?" she asked, referring to the World Trade Organization.

"It's definitely upsetting the applecart in terms of how we've been thinking about the role of international trade institutions, international trade rules and trade agreements," she said.

Source: HDN