On May 30, President Donald Trump announced a significant increase in tariffs on steel and aluminum imports, doubling them to 50%. The announcement took place at US Steel’s Mon Valley Works-Irvin plant. This was a huge victory in the growing trade war that the Trump administration started. This decision is part of the Biden Administration’s effort to reshore manufacturing considered vital to our national and economic security.
President Trump emphasized the importance of steel in his speech, stating, “If you don’t have steel, you don’t have a country.” He presented the tariffs as critical to protecting the United States’ manufacturing base. As many have stated, a strong manufacturing base is the foundation of any economic or national defense.
The administration is serious about increasing domestic production, including renewables. Chief among them is the concern that the US continues to buy more steel than it makes. Lourenco Goncalves, CEO of Cleveland Cliffs, noted that despite the new tariffs, the company is not considering restarting production of tin mill steel used for cans. This speaks to a deeper industry concern about the corrosive effects of elevated tariffs on the manufacturing base as a whole.
Additional tariffs by President Trump that started the trade war in February were the beginning of a slew of tariffs. These previous measures have already hit every sector hard. His administration’s previously threatened 25% tariff on imported aluminum was predicted to kill about one million American jobs. Here was the CEO of Alcoa, William Oplinger, underscoring this big effect. This movement reflects a deep, bipartisan concern among economists and industry leaders about the negative impacts such tariffs would have if implemented.
That’s because the economic effects of raising tariffs are enormous. Since the day the 25% tariffs went into effect back in 2018, automakers and other impacted industries have watched their prosperity go up in flames. They’ve estimated damages in the billions. Spot steel prices already spiked by more than 20% following the imposition of the first round of tariffs. Yet overall steel prices shot up 6% between March and April. Aluminum prices were up 2% over that same timeframe. That’s according to the federal government’s Producer Price Index, which was the first bellwether to report this increase.
Trade experts warn that tariffs may save certain steel jobs, but they always cost jobs in other industries. Larry Summers, former Treasury Secretary, remarked, “I think that’s a really quintessentially damaging policy. There are (at least) 50 times more workers in industries that use steel, like cars, than there are in the steel industry.” He further asserted that “the net effect of this is going to be to destroy manufacturing jobs,” warning that higher input costs would ultimately push up consumer prices.
The US aluminum industry is indeed paying attention to short-term market shocks. It’s heavily reliant on imports from Canada, where energy is far cheaper. That’s why industry representatives have been pushing the administration to take a more nuanced approach. They recommend only applying such high tariffs on countries like China that are well-known for predatory trade activities. The Aluminum Association stated, “We urge the administration to take a tailored approach that reserves high tariffs for bad actors—such as China—that flood the market and includes carve outs for proven partners—such as Canada.”
Despite concerns over rising costs, Goncalves argued that the average increase in car prices resulting from the tariffs remains marginal. “The average cost of a car is $48,000, with an added $300, it’s $48,300. That’s not going to be the decision-making factor for a person to buy or not buy a car,” he contended.
As the administration continues its aggressive trade policy, it faces ongoing criticism from various sectors worried about the long-term implications for American manufacturing. Analysts emphasize that while protecting domestic industries is a stated goal, it is crucial to consider the broader economic impact across multiple sectors.
