WASHINGTON (AP) — The American president Donald Trump eliminated on Monday night the exceptions and exemptions of his 2018 steel tariffs, which means that all imports of this product will be taxed at a minimum of 25%. The president also increased his aluminum tariffs from that year from 10% to 25%.
"We were being hit by both friends and enemies," declared Trump when signing two proclamations that modify the orders he issued during his first term, which will come into effect on March 4. "It's time for our magnificent industries to come back to the United States."
Why did Trump impose these tariffs?
The measures are part of a strong effort by the president to readjust global trade, and Trump said that tax increases on individuals and companies that buy products manufactured abroad will ultimately strengthen domestic manufacturing.
But the tariffs would affect allies, as the four largest sources of steel imports are Canada, Brazil, Mexico, and South Korea, according to the American Iron and Steel Institute.
Trump also intends to readjust US taxes on all imports this week to match the same levels charged by other countries. All of this adds to the 10% tariffs he has already imposed on China, to the retaliatory tariffs ordered by Beijing that began on Monday, and to the US tariffs planned for Canada and Mexico that have been suspended until March 1.
The tariffs on Monday immediately sparked criticism from Canada, the largest source of steel imports for the United States. Candace Laing, president and CEO of the Canadian Chamber of Commerce, said that Trump was a destabilizing force in the global economy: "Today's news makes it clear that perpetual uncertainty is here to stay."
Tariffs carry risks of inflation at a time when voters are already tired of high prices and fearful that price increases will overshadow any income gains. Trump argues that tariffs will level the playing field in international trade and make American factories more competitive, so any pain felt by consumers and businesses will be worth it in the long run.
Of the approximately 29 million net tons of steel imported to the United States last year, just under 2% came from China. However, the White House argues that tariff exemptions granted during the previous four years by President Joe Biden's administration allowed Chinese and Russian steel and aluminum to pass through other nations to reach the United States.
While tariffs could help the finances of steel mills and aluminum smelters, they could also increase costs for manufacturers who use the metals as raw materials to produce automobiles, appliances, and other items.
Glenn Stevens Jr., CEO of MichAuto, pointed out that the automotive industry would likely have to increase prices in response to tariffs. In turn, higher prices would reduce sales and harm companies' results, resulting in fewer jobs in the factories.
Howard Lutnick, chosen by Trump to be Commerce Secretary, said that the increase in tariffs would bring back 120,000 jobs to the United States. It was not clear how he determined that number. The primary metals industry added around 14,000 jobs during the first 12 months when tariffs on steel and aluminum were originally imposed, although the gains were quickly lost due to the coronavirus pandemic in 2020.
Will inflation rise in the United States?
Consumers already seem to be anticipating that inflation will become a bigger problem. On Friday, the preliminary results of February from the University of Michigan Consumer Survey found that inflation expectations for the next year increased from 3.3% in the previous month to 4.3%.
Economists predict that the government report on inflation to be released on Wednesday will show a 2.8% increase in consumer prices, suggesting that the public views tariffs as a significant risk to their financial well-being.