Trump extends trade war to the entire world with tariffs on aluminum and steel

With the announcement that he is imposing 25% tariffs on aluminum and steel imports from around the world, U.S. President Donald Trump on Monday escalated the hostilities of the global trade war he declared upon his return to the White House. Trump adopted this measure — which adds to the tariffs against China last week — by means of an executive action that he signed in the Oval Office. “This is a big deal — making America rich again,” he said.

The new tariffs mainly affect the United States’ allies, including the European Union, and in the case of its North American partners Canada and Mexico, they represent a de facto breach of the free trade agreement that unites them (USMCA). The levies are expected to go into effect on March 4, according to Reuters.

The top five steel suppliers to the U.S. in January were Canada ($11.2 billion), followed by Brazil, Mexico, South Korea and Germany. America’s neighbor to the north also leads the list of aluminum exporters with $9.5 billion, with the United Arab Emirates, Russia and China a considerable distance behind. This makes Canada the main loser of this measure, which comes just a week after Trump threatened 25% tariffs on Canadian products, although he ended up postponing them for a month after the markets collapsed and Ottawa made reciprocal threats.

But the tariffs will not only hurt those countries; they also promise to increase costs for American businesses and consumers, including the auto industry and consumers of canned beverages. The new administration believes that the benefits of the announced tariffs to the domestic steel and aluminum industry will outweigh the harm to other sectors.

The move was not a surprise to anyone, because Trump had announced on Sunday afternoon his intention to change the rules of trade in both products, as he had already done during his first term, when he decreed taxes of 25% on steel and 10% on aluminum. Also, because during the campaign that returned him to the White House, the candidate repeated at his rallies that “tariff” was his favorite word in the dictionary.

The sequence of events — the previous bombshell and the Monday in suspense — meant that the week in the White House, the fourth of Trump’s second term, began like the previous one, with the escalation of a trade war with unpredictable consequences for the global economy. Only last Monday, Canada and Mexico achieved a one-month postponement in the implementation of 25% tariffs that Trump had threatened them with the previous Saturday.

A month to negotiate

A call with President Claudia Sheinbaum was enough for Mexico to pause the tariffs. In exchange, Sheinbaum promised to reinforce the military’s presence on the border and a series of other measures, largely already underway. Canada, where Prime Minister Justin Trudeau and other authorities had responded to the threat with a detailed list of tariffs of their own on American products especially selected to harm Republican states, obtained a similar reprieve after making similar promises aimed at controlling human and fentanyl trafficking on the border between the two countries.

This month, Trump hopes, will serve to extract concessions that will allow him to even out the balance of trade with his two partners in the USMCA, the trade agreement that he is renegotiating all by himself. Mexico is, after displacing China in 2023, the main supplier of the United States. Imports from Mexico reached a historical maximum of $505.9 billion last year. Although American exports to Mexico also increased, the trade deficit between the two countries also marked a new record of $171.2 billion. Canada’s amounted to $63.4 billion, 1.5% less than the previous year, according to data from the Bureau of Economic Analysis, dependent on the Department of Commerce.

The last time Trump imposed tariffs on steel and aluminum, he did so under a 1962 law — the same one he is invoking now — that allows the president to raise taxes on imports that pose a threat to national security without congressional approval. China and the European Union then responded with retaliatory tariffs on American exports, especially targeting agricultural products. Then came exemptions for allied countries and blocs, including Canada, Mexico and Brazil, which are now, at least for the moment, not being contemplated. During his own term, Joe Biden extended these quotas to the European Union and the United Kingdom.

The absence of any exceptions this time around has considerably increased the number of countries affected by the renewed protectionism of the new U.S. administration. China has been in that club since last week after Trump announced that he would impose 10% tariffs on its products, arguing that Beijing is not doing enough to stop the illegal trafficking of fentanyl, a powerful opiate that is responsible for around three-quarters of the nearly 100,000 overdose deaths recorded each year in the U.S. Behind this strategy — blaming others for the most serious drug crisis in the history of the United States — is the insistence on not addressing the causes on the demand side.

China — which responded to last week’s onslaught with reciprocal tariffs worth some $14 billion that took effect Monday — dominates global trade in aluminum and steel, but it does not export large quantities of either to the United States. Last September, Biden raised the tariff on both products to 25%. Most of China’s aluminum and steel stays within its borders, destined to supply the housing boom and the auto industry. A call between Trump and his Chinese counterpart, Xi Jinping, announced last week is still pending. Trump has said that he is in no hurry for that conversation to take place.

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