Gauging the Impact of Trump’s Latest Tariff Move on Steel, Aluminum 👉 Updatem News

News Analysis

A week after Canada was granted a pause on a broad 25 percent tariff, U.S. President Donald Trump wasted no time on his next target, slapping a 25 percent surtax on all steel and aluminum imports.

Canadian industry groups, who are the highest exporter of the two products to the United States, say the measure will be very disruptive and that efforts should be instead concentrated on countries like China that flood the market.

Trump’s rationale for imposing 25 percent tariffs on all steel and aluminum imports is the same as during his first term. He says the United States is impacted by cheap steel and aluminum, which undercuts domestic manufacturing and causes a national security issue.

The first Trump administration in 2018 had imposed on Canada 25 and 10 percent tariffs respectively on steel and aluminum, with Ottawa retaliating in kind along with targeting a range of U.S. goods with a 10 percent surtax.

Trump issued a proclamation on Feb. 10 that lifts the previous exemption granted to Canada in 2019 on steel and aluminum tariffs after the nearly year-long trade war.

The key immediate question is whether Canada can manage to get a pause or negotiate a deal before the new tariffs kick in on March 12. Trump granted Canada a pause on the broad 25 percent tariff last week to assess its measures to reinforce the border and counter fentanyl trafficking.

Prime Minister Justin Trudeau said on Feb. 11 his government will continue in the coming weeks to highlight to the U.S. administration the “negative impacts” of the “unacceptable tariffs” on both countries, while preparing a “firm and clear” response.

Integration

The steel and aluminum industries are well integrated, and Canada is the United States’ main supplier of both products.

Statistics Canada said the value of steel and aluminum exports to the United States after tariffs were imposed in 2018 fell to a 10-year low.

The steel industry is concentrated in Ontario, with Hamilton being a key centre, whereas Quebec province is a leader in aluminum production.

Business and trade groups have warned about the negative impacts of the incoming tariffs.

The Canadian Steel Producers Association said the 2018 tariffs caused “massive disruptions and harm on both sides of the border,” in a statement reacting to the latest tariffs announcement. It says the trade of steel between the two countries is worth $20 billion.

Meanwhile, the United Steelworkers union said Canada imports 39 percent of its steel from the United States and exports 94 percent of its production there. The union warns that Canada should prepare measures to prevent the influx of cheap steel from countries facing barriers to the U.S. market.

The industry group and the union are both encouraging Ottawa to quickly retaliate.

The Aluminum Association of Canada has also warned the tariffs will be “highly disruptive,” affecting jobs on both sides. The aluminum and steel associations each say the industry’s focus should be on countering China’s trade practices.

The industry group representing aluminum producers in the United States shares the same perspective. The Aluminum Association welcomed Trump’s move to safeguard its interests by pushing back on “unfairly traded aluminum from China and elsewhere.” The group noted, however, that the United States doesn’t currently have the smelting capacity to meet the country’s needs.

Countering China’s trade practices is a Trump objective with the new tariffs and a reason stated to remove the exemptions granted to countries like Canada.

“By granting exemptions to certain countries, the United States inadvertently created loopholes that were exploited by China and others with excess steel and aluminum capacity, undermining the purpose of these exemptions,” the White House said.

When Canada and the United States struck an agreement leading to the exemption on tariffs in 2019, the two countries had agreed to work on preventing the importation of dumped steel and aluminum or the transshipment of the goods made outside Canada or the United States to the other country.

Canada aligned its trade policy on China with the United States in October 2024, imposing a 25 percent tariff on Chinese steel aluminum.

National Security

Trump’s trade policies have been closely linked to security issues so far.

Trump’s initial tariff threat against Canada after he got elected in November was framed around illegal immigration and drug trafficking. After initially announcing the imposition of 25 percent tariffs on Feb. 1, Trump allowed for a 30-day pause on Feb. 3 to assess whether Canada’s new border and anti-crime measures are sufficient.

Trump told Fox News in an interview aired on Feb. 10 that he got “a lot of action” on the border from the Canadian government that “nobody expected,” before adding it is “not good enough.”

“When I talked about Canada, they gave us tremendous security … it started out for security, and then it started getting economic, and it’s really both,” he said.

In this context of uncertainty, it is difficult to gauge whether Canada dodged a bullet on the border issue for the mid to long term. But even if it did, a whole host of other issues could be raised by Trump in imposing further tariffs.

The president told Fox News the United States shouldn’t have to get cars from Canada and threatened tariffs on the industry. He has also criticized Canada for not pulling its weight in the NATO military alliance and not meeting spending requirements.

Original News Source Link – Epoch Times

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