Trump to announce 25pc steel and aluminium tariffs in latest trade salvo

ABOARD AIR FORCE ONE/SEOUL/FRANKFURT: President Donald Trump is expected to introduce new 25 per cent tariffs on Monday on all steel and aluminium imports into the US, on top of existing metals duties, in another major escalation of his shake-up of trade policy.

As the risk mounts of a multi-front trade war, the European Union flagged it may retaliate and Trump promised further announcements on Tuesday or Wednesday of broader reciprocal tariffs to match those of countries importing US goods.

Shares in US steel and aluminium makers jumped. Nucor and US Steel rose between 4 per cent and 7 per cent in morning trade, while Cleveland-Cliffs shares jumped 15 per cent. Century Aluminum added 13 per cent and Alcoa 4 per cent.

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Speaking to reporters on Air Force One on his way to Sunday’s NFL Super Bowl in New Orleans, Trump said he would announce the metals tariffs on Monday and the reciprocal tariffs soon afterwards, adding “if they charge us, we charge them.”

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

Meanwhile, 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.

During his first four-year term from 2017, Trump imposed tariffs of 25 per cent on steel and 10 per cent on aluminium.

But he later granted several countries exemptions, including Australia, Brazil, Canada and Mexico, and his successor Joe Biden later negotiated duty-free quota deals with Britain, Japan and the EU.

With more demands for exemption and negotiation in prospect, some said Trump’s action would first of all damage the US economy by raising the cost of the raw materials it depends on.

“Canadian steel and aluminum support key industries in the US from defence, shipbuilding and auto,” Canadian Innovation Minister Francois-Philippe Champagne posted on X.

“We will continue to stand up for Canada, our workers, and our industries.”

Australia, also a strategic US ally, has been making representations on aluminium and steel for months.

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

EU AND SOUTH KOREA WEIGH RESPONSES TO TRUMP TARIFFS

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

Hyundai Steel shares dipped by as much as 2.9 per cent amid a broader decline among South Korean steelmakers.

European steelmakers account for about 15 per cent of imports into the United States, and shares in ArcelorMittal and Voestalpine slipped between 1.3 per cent and 2.5 per cent. Germany’s Thyssenkrupp and Salzgitter were little changed.

The European Commission said it saw no justification for the imposition of tariffs: “We will react to protect the interests of European businesses, workers and consumers.”

It said Commission President Ursula von der Leyen would meet US Vice President JD Vance in Paris on Tuesday during an AI summit. The German government said it was “working towards ensuring that these measures (tariff increases) do not materialise”.

Trump also said that, while the US government would allow Japan’s Nippon Steel to invest in US Steel it would not allow a majority stake.

“Tariffs are going to make (US Steel) very successful again,” Trump said.

Nippon Steel declined to comment, but Japan’s Chief Cabinet Secretary Yoshimasa Hayashi said the company was considering a bold change in plan.

US steel mill capacity usage jumped above 80 per cent in 2019 after Trump’s initial tariffs, but has since fallen as China’s global dominance – unaffected by its exclusion by tariffs from the US market – has pushed down prices.

A Missouri aluminium smelter revived by the previous tariffs was idled last year by Magnitude 7 Metals.

Kevin Dempsey, head of the American Iron and Steel Institute, said it would work with Trump “to implement a robust and reinvigorated trade agenda to address the many foreign market-distorting policies and practices that create an unlevel playing field for American steelmakers.”

TRUMP PROMISES RECIPROCAL TARIFF ANNOUNCEMENT SHORTLY

Trump also promised detailed information on Tuesday or Wednesday on his reciprocal tariff plan.

The president 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 General Motors Ford and Stellantis’ US operations.

Overall, the US trade-weighted average tariff rate is about 2.2 per cent, according to World Trade Organization data, compared to 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.

Chris Swonger, CEO of the Distilled Spirits Council of the United States, said Trump’s new steel tariffs could lead to the EU imposing retaliatory duties on American whiskey.

“We are urging that the US and EU move swiftly to find a resolution. Our great American whiskey industry is at stake. 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,” he said.

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, Trump paused the tariffs until March 1. But he told Fox News that more measures were needed.

“Something has to happen, it’s not sustainable,” he said, “and I’m changing it.”