Trump's imposed 50% duties on imported steel and aluminum now active
Donald Trump's 50% tariffs on most imported steel and aluminum, effective starting March, are causing a stir. Here's the lowdown on how it's shaking up things, especially for the US's closest trading partners, Canada and Mexico.
The Tariff Blow-Up
On Wednesday, Trump went ahead with his pledge to increase tariffs on steel and aluminum imports from nearly every trading partner, except the UK. The new tariff rate now stands at a whopping 50%, up from the previous 25%. According to White House economic adviser Kevin Hassett, the decision was made after reviewing data that suggested a 25% increment was helpful but not enough.
Who's Feeling the Heat?
Here's a rundown of which countries are getting burned:
- Canada: Approximately a quarter of all steel used in the US is imported, with Canada and Mexico being the top importers. With the Aluminum tariffs, Canada is hitting exceptionally hard as the leading exporter to the US, with exports doubling the combined volume of the rest of the top 10 exporters.
- Mexico: Plagued by unsustainable and unfair tariffs, Mexico also ranks high in steel shipment volumes to the US, but imports more steel from the US than it exports.
The Economic Impact
With limited capacity to boost domestic production, import volumes are likely to remain steady unless the price increases undercut demand. The steel and aluminum market has already seen a shake-up this week, especially for aluminum, which has seen price premiums more than double this year.
Diplomatic Dance
In response to the increased tariffs, Canada and Mexico have expressed frustration, labeling the move as "unlawful" and "not fair." Canadian officials are actively negotiating to have these tariffs and others removed, while Mexican officials plan to seek an exemption from the increase.
The Bigger Picture
The increased tariffs not only strain economic relations but also threaten key industries, such as automotive manufacturing and construction supplies, that rely on exports to the US. If the tariffs remain in place, these industries may face reduced competitiveness and potential layoffs.
The situation remains fluid, with the US offering some flexibility for the United Kingdom. This suggests that exemptions or reductions for Canada and Mexico could be possible if new agreements or concessions are reached.
However, continued escalation of tariffs could reignite trade conflicts, undermining the benefits of trade agreements like the USMCA (United States–Mexico–Canada Agreement), and disrupting broader economic cooperation.
Stay tuned for updates on this evolving situation!
Sources: Reuters
- The increased tariffs on imported steel and aluminum by Donald Trump, effective from March, are fueling anxiety, particularly among the US's closest trading partners, Canada and Mexico.
- With Canada being the leading exporter of steel to the US, its economy is experiencing a significant impact due to the tariffs, as exports doubled the combined volume of the rest of the top 10 exporters.
- The new tariff rate of 50% on steel and aluminum imports was devised after White House economic adviser Kevin Hassett reviewed data suggesting that a 25% increase was helpful but insufficient.
- The general news and finance industries are closely watching the ongoing diplomatic dance between the US, Canada, and Mexico, as the potential for exemptions or reductions in tariffs could affect key industries, such as automotive manufacturing and construction supplies, and broader economic cooperation.
