Trump raises tariffs on aluminium and steel imports in latest trade war salvo

WASHINGTON - US President Donald Trump substantially raised tariffs on steel and aluminium imports on Feb 10 to a flat 25 per cent “without exceptions or exemptions”, in a move to aid the struggling industries but which increases the risk of a multi-front trade war.

Mr Trump signed proclamations

raising the US tariff rate on aluminium to 25 per cent

from his previous 10 per cent and eliminating country exceptions and quota deals as well as hundreds of thousands of product-specific tariff exclusions for both metals.

A White House official confirmed that the measures would take effect on March 4.

The tariff rate will rise back to 25 per cent on millions of tonnes of steel and aluminium imports from Canada, Brazil, Mexico, South Korea and other countries that had been entering the US duty free under the carve-outs.

The move will simplify tariffs on the metals “so that everyone can understand exactly what it means”, Mr Trump told reporters.

“It is 25 per cent without exceptions or exemptions. That is all countries, no matter where it comes from, all countries.”

Mr Trump later said he would give “great consideration” to Australia’s request for an exemption to the steel tariffs.

The proclamations were extensions of Mr Trump’s 2018 Section 232 tariffs to protect domestic steel and aluminium makers on national security grounds.

A White House official said the exemptions had eroded the effectiveness of these measures.

Mr Trump also will impose a new North American standard requiring steel imports to be “melted and poured” and aluminium to be “smelted and cast” within the region to curb US imports of minimally processed Chinese and Russian metals.

The order also extends the tariffs to downstream products that use foreign-made steel, including fabricated structural steel, aluminium extrusions and steel strand for pre-stressed concrete, a White House official said.

As he signed the order at the White House, Mr Trump said he would follow the Feb 10 action with announcements about reciprocal tariffs on all countries that impose duties on US goods over the next two days, and said he was also looking at tariffs on cars, semiconductor chips and pharmaceuticals.

Asked about threats of retaliation by other countries against his new tariffs, Mr Trump said: “I don’t mind.”

Mr Trump’s trade adviser Peter Navarro said the latest measures would help US steel and aluminium producers and shore up America’s economic and national security.

“The steel and aluminium tariffs 2.0 will put an end to foreign dumping, boost domestic production and secure our steel and aluminium industries as the backbone and pillar industries of America’s economic and national security,” he told reporters.

“This isn’t just about trade. It is about ensuring that America never has to rely on foreign nations for critical industries like steel and aluminium.”

US data showed aluminium smelters produced just 670,000 metric tonnes of the metal in 2024, down from 3.7 million in 2000. Plant closures in recent years including in Kentucky and Missouri have left the country largely reliant on imports.

Canada’s industry minister said the US tariffs were “totally unjustified”, with Canadian steel and aluminium supporting key US industries, including defence, shipbuilding, energy and autos.

“This is making North America more competitive and secure,” Mr Francois-Philippe Champagne said in a statement. “We are consulting with our international partners as we examine the details. Our response will be clear and calibrated.”

While China exports only tiny volumes of steel to the US, it is responsible for much of the world’s excess steel capacity, according to the US. It says subsidised production in China forces other countries to export more and leads to trans-shipment of Chinese steel through other countries into the US to avoid tariffs and other trade restrictions.

Shares of Chinese steelmakers dropped on Feb 11 as the new tariffs added to uncertainty in the sector.

Cold war trade law

Mr Trump first targeted steel and aluminium for tariffs in 2018 under a Cold War-era national security law.

He later granted several countries exemptions, including Canada, Mexico and Australia, and struck duty-free quota deals for Brazil, South Korea and Argentina based on pre-tariff volumes.

Mr Trump’s successor, former US president Joe Biden, later negotiated similar duty-free quotas for Britain, Japan and the European Union.

“We applaud the President for instituting these 25 per cent tariffs on steel imports and getting rid of exclusions, carve-outs and quotas that are based on antiquated data,” said Mr Philip Bell, president of the Steel Manufacturers Association.

These were based on 2015 to 2017 import levels that no longer reflect current market dynamics, Mr Bell said.

Before the proclamations, shares in US steel and aluminium makers jumped, while shares in European and Asian steelmakers fell.

The largest sources of US steel imports are Canada, Brazil and Mexico, followed by South Korea and Vietnam, according to government and industry data.

Canada, whose extensive hydropower resources aid its metal production, accounted for 79 per cent of US primary aluminium imports in the first 11 months of 2024.

US trade partners warned the new barriers would hurt US automakers, shipbuilders and other industries.

Australian Trade Minister Don Farrell said: “Australian steel and aluminium are creating thousands of good-paying American jobs, and are key for our shared defence interests.”

US distillers warned that the steel tariffs could prompt the EU to raise duties on American whisky.

“A 50 per cent tariff on America’s native spirit will have a catastrophic outcome for the 3,000 small distilleries across the United States,” said Mr Chris Swonger, chief execuitve of the Distilled Spirits Council of the United States.

The European Commission said it saw no justification for the tariffs and said President Ursula von der Leyen would meet US Vice-President JD Vance in Paris on Feb 11 during an artificial intelligence summit.

In South Korea, the Industry Ministry called in steelmakers to discuss how to minimise the impact of tariffs.

Reciprocal tariffs

Mr Trump also has promised detailed information on Feb 11 or 12 on his reciprocal tariff plan.

He has long complained about the EU’s 10 per cent tariff on auto imports, much higher than the US car rate of 2.5 per cent. However, the US applies a 25 per cent tariff on pickup trucks, a vital source of profit for Detroit automakers such as General Motors.

Overall, the US trade-weighted average tariff rate is about 2.2 per cent, according to World Trade Organisation data, compared with 12 per cent for India, 6.7 per cent for Brazil, 5.1 per cent for Vietnam and 2.7 per cent for the EU.

Indian Prime Minister Narendra Modi is preparing tariff cuts ahead of a Feb 12 meeting with Mr Trump that could boost American exports, Indian government officials said.

Mr Trump has previously called India a “very big abuser” on trade, and his top economic adviser Kevin Hassett singled out the country as having “enormously high” tariffs in a CNBC interview.

Mr Trump had already threatened to impose tariffs of 25 per cent on all imports from America’s two largest trading partners, Canada and Mexico, saying they must do more to halt the flow of drugs and migrants across the US border.

After some border security concessions, Mr Trump paused the tariffs until March 1.

US data showed that demand for aluminium in 2024 far exceeded domestic production, leaving the country largely reliant on imports. REUTERS