New Steel Tariffs Fuel International Fallout

President Trump held a rally Friday evening at a US Steel plant in West Mifflin, PA, and announced he would double the current tariff rate on imported steel and aluminum from 25% to 50% as of June 4.

Now, some Canadian, EU, and British leaders may end up with “We Are Never Ever Getting Back Together” on their Spotify Wrapped this year:

• Canadian Prime Minister Mark Carney met with Trump in the Oval Office last month to mend fences after the US’ 25% tariff on steel and aluminum went into effect. The head of the Canadian Steel Producers Association called the additional increase “catastrophic.” Canada is the US’ largest supplier of steel and aluminum.
• The UK thought it was sitting pretty after becoming the first nation to secure a trade deal with Trump three weeks ago with the help of new PM Keir Starmer, which allegedly included a zero-tariff provision for steel and aluminum. The BBC reported that it was agreed to, but never signed.
• On Saturday, the European Commission released a statement saying it received the news with strong regret and that the tariff increase “undermines ongoing efforts” to reach amicable trade resolutions. It said the bloc would implement countermeasures.

The potential 2x of the tariff is aimed at increasing US production of steel and aluminum. S&P Global analysts said levies could lead to supply security and job creation, but reducing foreign sources of the metals might translate to higher production costs for “downstream” manufacturers (such as automakers), supply chain disruptions, and higher prices for consumers.

Additionally, no cost-effective domestic plants are sitting idle, so either new ones would need to be built (not quick) or inefficient plants would have to be reactivated (not cheap).

Cool for the summer? Goldy Hyder of the Business Council of Canada said that the best response to the weekend’s development was “not to take the bait” and that “these moving goalposts is just a strategy to try and get Canada to give more” in trade negotiations.—HVL