A 25% tariff imposed by Donald Trump on all steel and aluminum imports to the United States took effect on Wednesday (12). It is the latest blow in Trump’s multifaceted tariff plan aimed at correcting trade imbalances and reviving the domestic industry. However, it risks triggering a global trade war, as the European Union retaliated with countermeasures on U.S. exports to the region. Similarly, Canada also announced over $20 billion in retaliatory measures.
The tariffs on steel and aluminum mark the first time in Trump’s second term that a set of tariffs has been applied to all countries.
But the imposition of tariffs on steel and aluminum represents a risky bet: while it may give a boost to U.S. steel and aluminum industries, it will raise prices for an essential ingredient for American manufacturers, which could be passed on to consumers. The costs may outweigh the benefits.
It could also backfire on the industries that the measure is supposedly protecting. It is estimated that Trump’s tariffs could cost 100,000 jobs, including 20,000 in the aluminum industry, warned William Oplinger, CEO of Alcoa, one of the largest aluminum manufacturers in the U.S.
In total, the U.S. imported $31.3 billion in iron and steel and $27.4 billion in aluminum last year, according to data from the U.S. Department of Commerce.
Canada was the largest source of iron, steel, and aluminum, with the U.S. importing $11.4 billion in aluminum and $7.6 billion in iron and steel. Other major foreign sources of aluminum include China, Mexico, and the United Arab Emirates. For steel, the main sources are Brazil, Mexico, and South Korea, according to last year’s U.S. trade data.
Brazil Does Not Want to Retaliate, but to Negotiate
The Brazilian Minister of Finance, Fernando Haddad, stated that the Brazilian government will not retaliate immediately. He mentioned that the government’s interest is to negotiate. Thus, before retaliation and reciprocity, Brazil intends to sit at the negotiation table with the Americans.
Sources: CNN and UOL