President Donald Trump as expected raised tariffs on steel and aluminum imports to a flat 25% without exceptions, aiming to support struggling domestic industries but escalating trade tensions worldwide. The measures, effective March 12, eliminate country-specific exemptions and extend to downstream steel and aluminum products, affecting key suppliers such as Canada, Mexico, Brazil, and South Korea.
The move expands Trump’s 2018 Section 232 tariffs, justifying the action on national security grounds.
“It’s 25% without exceptions,” Trump emphasized, adding that reciprocal tariffs on countries taxing U.S. goods will be announced soon.
According to the White House fact sheet, the move is to restore fairness into the steel and aluminum markets, while also strengthening the manufacturing industry in the U.S. The White House fact sheet states:
- Foreign nations have been flooding the United States market with cheap steel and aluminum, often subsidized by their governments.
- A report from the first Trump Administration found that steel import levels and global excess were weakening our domestic economy and threatening to impair national security.
- While the domestic steel industry briefly achieved 80% utilization in 2021, subsequent trade pressure following the COVID-19 pandemic has depressed domestic production. In 2022 and 2023, capacity utilization fell to 77.3% and 75.3%, respectively. High import volumes from sources exempt from Section 232 tariffs are a major factor in depressing domestic production volumes.
- For aluminum, there was an increase in the capacity utilization rate between 2017 and 2019, from 40% to 61% during that period. But since 2019, the aluminum capacity utilization has once again seen a steady decline, falling from 61% to 55% between 2019 and 2023.
- The United States does not want to be in a position where it would be unable to meet demand for national defense and critical infrastructure in a national emergency.
Criticism from Canada
Canada criticized the action as unjustified, citing its critical role in U.S. supply chains. The European Commission, South Korea, and other affected nations expressed concern, with retaliatory measures and negotiations expected in the coming days.
U.S. steel and aluminum producers saw stock gains, while foreign steelmaker shares fell.
Trump Considers Exemption for Australia on Steel, Aluminum Tariffs
President Trump agreed to consider exempting Australia from newly reinstated steel and aluminum tariffs, following a call with Australian Prime Minister Anthony Albanese. Trump reintroduced a 25% tariff on imports after previously allowing duty-free quotas. The decision could escalate trade tensions globally.
Citing Australia’s trade surplus with the U.S. and the strategic Indo-Pacific partnership, Trump acknowledged the exemption request, saying he would “give great consideration” due to the strong bilateral ties and Australia’s minimal share of U.S. steel (1%) and aluminum (2%) imports. Albanese described the call as constructive, expressing confidence in a favorable outcome. Australian officials highlight the importance of steel exports for U.S. defense supply chains, especially under the AUKUS pact.
South Korea Seeks Talks with President Trump
South Korea’s acting President Choi Sang-mok said the government would seek talks with the Trump administration on the tariffs Washington is imposing to reflect the interests of domestic companies. The CEOs of 20 major South Korean conglomerates plan to visit the U.S. in the near future, while the government intends to discuss response measures with Japan and the European Union, Choi said.
EU Expected to Respond Strongly
The European Union pledged a robust response to the U.S.’ recent imposition of 25% tariffs on steel and aluminum imports, a move that has reignited transatlantic trade tensions. European Commission President Ursula von der Leyen warned that “unjustified tariffs” will trigger “firm and proportionate countermeasures.”
The EU is exploring several options, including:
- Targeted tariffs: Imposing reciprocal tariffs on U.S. goods, focusing on politically sensitive sectors.
- WTO challenge: Filing a complaint with the World Trade Organization.
- Safeguard measures: Protecting European industries from potential surges in imports redirected from the U.S. market.
German Chancellor Olaf Scholz and French Industry Minister Marc Ferracci have both emphasized the need for a unified EU response. The European Commission has convened an emergency meeting of trade ministers to discuss next steps, signaling the potential for a broader trade conflict if the U.S. does not reconsider its tariff policy.
Trudeau Slams U.S. Tariffs on Canadian Steel and Aluminum as “Unjustified”
Canadian Prime Minister Justin Trudeau criticized U.S. tariffs on steel and aluminum as “entirely unjustified,” according to a CBC video posted on X. Trudeau emphasized that Canada’s response “will be firm and clear” while the government engages with Donald Trump’s administration to underline the tariffs’ negative impact on both nations. When asked about the possibility of retaliatory tariffs, Trudeau expressed hope that escalation could be avoided.
Trump Confirms Speaking with China’s Xi Since Taking Office
President Donald Trump revealed in a Fox News interview that he had spoken with Chinese President Xi Jinping since his inauguration on Jan. 20 but did not disclose details of the conversation.
“We have a very good personal relationship,” Trump said, though he did not specify when the call took place or what was discussed.
Despite rising tensions between the U.S. and China over trade, cybersecurity, Taiwan, and other issues, Trump previously stated he was in no rush to contact Xi regarding the ongoing trade conflict. The Chinese Foreign Ministry did not confirm the latest conversation, instead referring to a scheduled call on Jan. 17 before Trump officially took office.
Meanwhile, China recently responded to U.S. trade tariffs with targeted duties on American imports and potential sanctions on several U.S. companies, including Google.
Trump’s plan to call Xi following his latest round of tariffs on China has been delayed, with no contact yet made.
Trump says he’s “in no hurry,” but the Wall Street Journal says insiders suggest that Beijing hasn’t proposed a concrete plan to curb China’s role in the U.S. fentanyl crisis — a key demand behind Trump’s decision to impose an additional 10% tariff on Chinese goods.
A U.S. administration official noted that the tariffs could be paused if “serious headway” is made on fentanyl during the next Trump-Xi conversation. Unlike the quick deals reached with Mexico and Canada that resulted in suspended tariffs, China has yet to offer a concession.
“The Chinese should just offer to crack down on fentanyl once and for all,” an American executive told the WSJ, highlighting Beijing’s proven efficiency in suppressing dissent and private enterprise. But President Xi appears in no rush. Instead, he’s pursuing a broader agreement that could shape long-term U.S./China relations.
Beijing’s initial proposal, according to the Wall Street Journal, involves reinstating elements of the 2020 trade deal, a renewed pledge not to devalue the yuan, and commitments for increased U.S. investments. For now, however, Xi seems willing to absorb the additional tariffs, relying on Chinese companies’ ability to reroute exports through third countries.
In response to the U.S. tariffs, China has imposed modest retaliatory measures, avoiding full escalation while keeping leverage on the table. Actions include new tariffs on U.S. energy imports and an investigation into Google for potential antitrust violations.
Of note:
1.36 billion shipments entered the U.S. in fiscal year 2024 using the de minimisprovision. The provision allowed bargain platforms Shein and Temu to skirt import duties on low-value packages from China.
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