President Donald Trump announced late last week that tariffs on steel and aluminum products would double, shocking markets further amid the ongoing tariff war. Today, Trump is expected to sign an executive order making the increase official, according to reports.
What are the specifics of the steel and aluminum tariff increase?
As part of the executive order, tariffs on steel and aluminum will double to 50% from the current 25% level. Markets have reacted with higher steel prices as a result. The order is expected to go into effect, tomorrow, June 4, 2025, meaning the tariffs would be raised almost immediately.
The move to double steel and aluminum tariffs comes a week after announcing Trump would approve the merger between U.S. Steel and Nippon Steel, a Japanese-owned steel company. That deal attracted criticism from many parties, including U.S. union steelworkers, the Japanese government, regional politicians, and some business leaders. U.S. Steel, as part of the deal, will become a subsidiary of Nippon Steel.
President Trump’s stated goal is to ensure that “at 50%, they can no longer get over the fence”, meaning that steel companies who are exporting to the U.S. can no longer import steel and aluminum products for cheap. Trump has frequently called out Canada as a leading exporter of unfair steel and aluminum practices.
What Trump hopes will happen as a result of the tariff increase on steel and aluminum products.
As President Trump raises steel and aluminum tariffs, he is hoping that the tariffs will combine with the U.S. steel merger (which he continues to call a “partnership”) to keep steel and aluminum products from being produced abroad. However, as with many products that are subject to tariffs, the consumer will eventually pay higher prices as a result of the tariffs. Ultimately, Trump may yet modify the tariffs to be higher or lower, so much uncertainty remains.
As part of the U.S. Steel-Nippon Steel deal, Trump vowed to keep U.S. Steel producing steel and aluminum products in the U.S. for a full decade, although many factors could change, especially with the new tariffs. Large price increases could force major companies to look elsewhere for supply chain structures for steel production.
Former President Joe Biden previously rejected the U.S. Steel merger, on national security grounds, a decision that was quickly put into review by the incoming Trump administration.
