Trump’s Trade Strategy: Higher Tariffs on Steel and Aluminum
President Donald Trump has reintroduced tariffs as part of his trade policy, signing executive orders to impose a 25% import duty on steel and aluminum. While the goal is to protect U.S. manufacturers from foreign competition, experts warn that American consumers may face higher prices on goods made with these metals.
Why Is Trump Raising Tariffs?
On Monday, Trump signed two executive orders enforcing the tariffs. He believes this move will encourage companies to set up manufacturing plants in the U.S., boosting domestic production and reducing reliance on foreign steel imports.
“Our nation needs steel and aluminum made in America—not overseas. To secure the future of U.S. manufacturing, we must boost domestic production, something we haven’t seen in decades,” Trump said.
The new tariffs affect $50 billion worth of imports, impacting steel sourced from Canada, Mexico, Brazil, South Korea, and Japan, according to the International Trade Administration.
Who Will Pay for These Tariffs?
Since U.S. importers pay tariffs directly to the government, these costs will likely be passed down to consumers. Experts predict price hikes for cars, appliances, and other steel-heavy products.
Economist Dean Baker explains:
“If you tax imported steel and aluminum, you’ll drive up the cost of everything that uses them—especially cars.”
How Much Could Prices Rise?
- A typical car uses about 1,000 pounds of steel, costing around $6,000–$7,000 per vehicle.
- A 25% tariff could raise car prices by $1,000–$1,500.
- If tariffs expand to Mexico and Canada, imported car prices could increase by $6,250, according to S&P Global Mobility.
Inflation Risks & Economic Impact
Economists warn that Trump’s tariffs could push inflation higher in 2025. While a 30-day delay has been granted for Mexico and Canada, Trump has signaled plans for additional tariffs, including “reciprocal tariffs” on countries that tax U.S. goods.
“If they charge us, we charge them. If they tax us 130%, we’re not going to let it continue,” Trump said.
How Could Inflation Change?
- Deutsche Bank estimates that steel, aluminum, and reciprocal tariffs could increase inflation by 0.4 percentage points.
- If tariffs on Mexico and Canada take effect, inflation could surpass 3.5%.
- The Federal Reserve has paused interest rate cuts due to inflation concerns.
Will Steel Prices Drop?
During Trump’s first term, U.S. steel producers increased production after similar tariffs were introduced. This led to a short-term price spike, but steel prices eventually returned to pre-tariff levels within a year.
Public Opinion & Economic Uncertainty
Despite strong approval ratings early in his term, a CBS News poll found that two-thirds of voters believe Trump isn’t doing enough to lower consumer costs. With inflation still a concern, the Consumer Price Index for January is expected to show prices holding steady at 2.9%.
“These are uncertain times, and the biggest wildcard for inflation right now is tariffs,” Baker added.
Final Thoughts
Trump’s 25% tariffs on steel and aluminum could boost U.S. manufacturing but also raise consumer prices on key products. If additional tariffs are imposed, inflation could rise further, making goods even more expensive. The long-term effects will depend on how businesses and policymakers react to these trade policies.
