Markets react as Trump announces new tariffs on steel and aluminum imports, raising fears
US President Donald Trump plans to formally announce 25 percent tariffs on steel and aluminum imports on Monday, according to BNN Bloomberg.
The move is part of his broader effort to reshape global trade terms, an approach that has increased economic uncertainty.
Trump also intends to reset US import taxes this week to match the levels imposed by other countries.
These tariffs come in addition to the 10 percent duties already levied on China, as well as China’s retaliatory tariffs that took effect Monday.
The US tariffs planned for Canada and Mexico remain suspended until March 1.
Concerns over inflation have grown as voters continue to struggle with rising prices. While Trump argues that tariffs will enhance US manufacturing competitiveness and ultimately benefit the economy, critics warn of higher costs for consumers and businesses.
“‘Fairness’ is in the eye of the beholder, but the more fundamental question is whether the US actually benefits from such new tariffs,” Benn Steil, director of international economics at the Council on Foreign Relations, said in an email.
Steil noted that tariffs would likely lead to increased prices for US consumers, retaliatory measures from other countries, and job losses in industries that rely on imported raw materials.
Other nations have begun to mirror Trump’s trade approach, particularly in using national security as justification for trade restrictions.
Steil pointed out that national security-related tariffs cannot be challenged at the World Trade Organization, making them an attractive tool for governments looking to impose new barriers.
“Not surprisingly, everything from ‘door frames’ to ‘alcoholic beverages’ have of late been subject to new import barriers in the developing world on the grounds of national security,” Steil added.
The White House has yet to fully counter economic analyses indicating that tariffs could hinder growth and accelerate inflation. Officials have only stated that these assessments do not account for Trump’s proposed tax cuts and deregulation plans.
However, the administration has not provided a detailed budget proposal outlining how these policies would offset the potential economic downsides of tariffs.
Consumer expectations for inflation have already shifted. According to the preliminary February results from the University of Michigan Survey of Consumers, year-ahead inflation expectations jumped from 3.3 percent in January to 4.3 percent.
Meanwhile, economists predict that the government’s inflation report, scheduled for release on Wednesday, will show consumer prices increasing by 2.8 percent, reinforcing concerns that tariffs may further strain household budgets.
Market reactions to the tariff announcement varied. Steel company stocks rose sharply on Monday as investors anticipated higher profits.
Cleveland-Cliffs, which is looking to acquire US Steel, surged 13 percent in morning trading. US Steel rose 4 percent, while Nucor and Steel Dynamics gained nearly 6 percent and 5 percent, respectively.
Conversely, businesses reliant on steel and aluminum imports saw their stock prices decline, reflecting concerns over rising material costs.
Automaker General Motors experienced a selloff, raising concerns about the broader manufacturing sector, which Trump has vowed to support.
“We have far more steel and aluminum-consuming businesses—think construction, machinery and equipment manufacturing, auto manufacturing—than we do steel and aluminum producers, so the advantage created for the producers comes at a much greater cost to downstream users,” said Erica York, vice president of federal tax policy at the right-leaning Tax Foundation.
Trump’s tariff policy remains ambiguous.
While speaking to reporters aboard Air Force One on Sunday en route to the Super Bowl, he stated, “Any steel coming into the United States is going to have a 25 percent tariff.”
Trade experts question whether this means the new tariffs will be additional to the 25 percent duties imposed in 2018 or the 25 percent tariffs that then-President Joe Biden placed on Chinese steel and aluminum in 2024.
There is also uncertainty over whether the tariffs will be uniformly applied, given that many steel imports currently bypass existing tariffs through exceptions.
Even those in favour of tariffs are seeking clarity.
Scott Paul, president of the Alliance of American Manufacturing, said on Monday that the specifics of Trump’s plan remain crucial.
“The details are going to matter a lot,” Paul said, acknowledging that tariffs could bolster US steel and aluminum production but emphasizing the need for clear implementation guidelines.
Domestically, the Trump administration is making significant policy changes alongside the tariffs.
The Department of Government Efficiency, led by Elon Musk, has cut US$900m in Education Department contracts, reflecting a broader effort to reduce government spending, according to AP News.
Additionally, the administration ended the product exclusion process, which previously allowed companies to request exemptions from tariffs on specific products.
According to New York Post, this decision removes a key mechanism that many businesses relied on to reduce the impact of tariffs.
The administration also pledged to increase oversight on mislabeling and tariff evasion, signaling a stricter enforcement approach.
