President Donald Trump imposed a 25% tariff on all steel and aluminum imports Wednesday, promising that the taxes would help create U.S. factory jobs. The move comes despite warnings from businesses and economists about economic disruptions, and as the stock market has lost 8% in the past month over trade fears, the Associated Press reports.
In a move he said was designed to spur investment in U.S. manufacturing, the president ended all the exemptions he had carved out to his 2018 tariffs on steel and aluminum. The move also raises the tariff on aluminum from 10% to 25%. It’s all part of a plan to reshape global trade policy with separate tariffs on Canada, Mexico, and China. The administration says it will expand tariffs to the European Union, Brazil, and South Korea beginning April 2.
Trump defended his approach to CEOs at a Business Roundtable meeting Tuesday, saying the tariffs are already prompting companies to invest in U.S. factories. He dismissed the recent stock market drop as being caused by slowing growth and said higher tariffs will be more effective at reviving manufacturing. “The higher it goes, the more likely it is they’re going to build,” he said of companies locating in the U.S.
But economists say the gains for the steel and aluminum industries may be outweighed by the costs to downstream manufacturers who use those metals. The U.S. International Trade Commission found that in 2021, those downstream companies lost $3.5 billion in production due to the tariffs, compared to a $2.3 billion gain in production by steel and aluminum producers.
And while Trump says the tariffs will lead to a wave of new factories — he pointed to potential expansions by Volvo, Volkswagen and Honda — businesses are confronted by the prospect of higher prices, lower sales and lower profits. That could make them reluctant to invest in new facilities.
“If you’re an executive in the boardroom, are you really going to tell your board it’s the time to expand that assembly line?” said John Murphy, senior vice president at the U.S. Chamber of Commerce.
