Donald Trump's 25% tariff on all steel and aluminium imports go into effect on Wednesday with US President asserting that these taxes would generate US factory employment during a period when his fluctuating tariff policies are unsettling the stock market and raising economic decline concerns.
Trump eliminated all exceptions from his 2018 metal tariffs, whilst also increasing aluminium tariffs from 10%. These actions, stemming from a February directive, form part of a comprehensive strategy to alter international trade. The US president has implemented separate tariffs on Canada, Mexico and China, with intentions to levy "reciprocal" rates on imports from the European Union, Brazil and South Korea beginning April 2, AP news agency reported.
During Tuesday's Business Roundtable meeting with CEOs, Trump stated that the tariffs were encouraging companies to invest in US factories. Despite an 8% decline in the S&P 500 stock index over the previous month due to growth concerns, Trump maintained that increased tariff rates would be more effective in restoring factory operations.
"The higher it goes, the more likely it is they're going to build," Trump told the group. "The biggest win is if they move into our country and produce jobs. That's a bigger win than the tariffs themselves, but the tariffs are going to be throwing off a lot of money to this country."
On Tuesday, Trump considered imposing 50% tariffs on Canadian steel and aluminium but maintained the 25% rate after Ontario cancelled plans to implement an electricity surcharge for Michigan, Minnesota and New York.
Will Trump's tariff impact Indian economy?
Moody's has issued a warning over the challenges that Indian steel manufacturers, who are currently experiencing difficulties with reduced prices and declining profits due to substantial steel imports into the country over the past 12 years, will face.
"The US tariffs on steel will increase competition and exacerbate oversupply at other steel producing markets. Indian steel producers will face increased challenges in exporting their products," stated Hui Ting Sim, assistant vice president at Moody's Ratings.
According to data from the Global Trade Research Initiative (GTRI), US imports of steel and aluminium have shown an upward trend despite the trade war beginning in 2018. Primary steel imports reached $33 billion in 2024, showing an increase from $31.1 billion in 2018.
Canada ($7.7 billion), Brazil ($5 billion), and Mexico ($3.3 billion) emerged as the primary suppliers during this period. In contrast, imports from China and India remained considerably lower at $550 million and $450 million respectively.
GTRI founder Ajay Srivastava observed Trump's latest tariff strategy as predictable. "If Trump follows the same playbook, the return of tariffs on steel and aluminium could be used as leverage in trade negotiations. The 2018 tariffs were widely seen as an aggressive strategy to force trading partners into concessions. The latest move, if implemented, could lead to new trade disputes and retaliatory measures from affected countries," he told PTI.
The initiative is expected to advantage US domestic steel manufacturers, providing them access to a market with robust steel demand, enabling them to increase their selling prices.
Trump's tariff impact on India's shipments to US
The recent announcement of 25% tariff on steel and aluminium has caused global concern, yet its effect on India's US exports is expected to be minimal.
India's iron and steel exports in the previous financial year reached $475 million, whilst iron and steel products amounted to $2.8 billion. The export value of aluminium and related products stood at approximately $950 million in 2023-24. According to government and American Iron and Steel Institute statistics, the US primarily imports steel from Brazil, Canada and Mexico, with South Korea and Vietnam following as significant suppliers.
The earlier implementation of tariffs by the Trump administration in 2018 included a 25% levy on steel and 10% on aluminium, justified on national security grounds. These measures encompassed most primary steel products, excluding stainless steel but including steel pipes and tubes. The widespread application of these tariffs to most nations led to reciprocal actions, heightening international trade tensions and forcing American automobile manufacturers to reduce their output.
Stay informed with the latest business news, updates on bank holidays and public holidays.
AI Masterclass for Students. Upskill Young Ones Today!– Join Now