President Donald Trump couldn’t let the Super Bowl hog the spotlight without casually dropping the latest geopolitics-shifting economic policy bombshell.
On his way to the big game yesterday, the president told reporters outside Air Force One that he planned to implement a 25% tariff on both steel and aluminum imports beginning today.
Trump has long railed against the decline in domestic metal manufacturing. During his first term, Trump imposed a 25% tariff on steel imports and a 10% tariff on aluminum imports. But within a year, countries like Canada, Mexico, and the EU were given exemptions.
This time, Trump told reporters that the tariffs would apply to “everybody,” which would seemingly mean, well, everybody—including close trading partners and allies Canada and Mexico.
Canada is by far the biggest exporter of both steel and aluminum to the US, shipping about $7.14 billion of steel and $9.42 billion worth of aluminum south of its border per year. Mexico and Brazil are the second and third largest exporters of steel to the US, while the UAE and South Korea take second and third place when it comes to aluminum, according to the International Trade Administration.
The latest step in escalating the trade war comes after Trump announced, then delayed, blanket 25% tariffs on Canada and Mexico. But he went forward with his 10% tariffs on China, while China’s retaliatory tariffs went into effect today.
Tariff-ic returns?
Right now, 25% of US steel is imported, and 80% of that is tariff-free, according to Citi analysts. But the new tariffs could push the price of steel up by $150 per ton.
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The US also imports 70% of its aluminum, and 60% of that is tariff-free right now. However, some aluminum is subject to a domestic fee called the Midwest Premium, and these new tariffs would cause the Midwest Premium to rise $0.40 from its current $0.28, according to Citi.
That’s why it should come as no surprise that steel and aluminum stocks jumped on the news. Cleveland Cliffs surged 17.93%, Nucor Corp rose 5.58%, and United States Steel Corp jumped 4.79%. Meanwhile, aluminum behemoth Alcoa Corp also rose 2.21% on the news, and Century Aluminum soared 10.22%.
Gold also rose 1.62% today, given that an ongoing tariff battle means more chaos and question marks ahead.
Analysts expect that these new tariffs will increase production costs in industries like automaking, aerospace, and oil refining, because imported steel will be more expensive, and domestic suppliers will likely raise their prices.
That is, if today’s tariffs actually go into effect. And knowing Trump, that’s a big if.—LB