June 4, 2025
On February 10, 2025, President Trump reinstated a 25% tariff on steel imports and raised aluminum tariffs to 25%, effective March 12. Enacted under Section 232 of the 1962 Trade Expansion Act, these tariffs eliminated exemptions for allies such as Canada, Mexico, and the EU, aiming to protect U.S. industries from import threats and Chinese overcapacity. On May 30, Trump escalated tariffs further to 50%, effective June 4, intensifying the trade war and sparking widespread debate about its legality, economic consequences, and governance implications.
Section 232 authorizes tariffs if imports threaten national security. Commerce Department investigations (2018) concluded that imports—especially from China—undermined domestic industries’ ability to meet defense needs. The 2025 proclamations argued that exemptions weakened earlier tariffs, justifying stricter measures. While US courts upheld prior Section 232 tariffs, a May 28 ruling rejected tariffs under the International Emergency Economic Powers Act (IEEPA). The administration is appealing, but Section 232’s broad authority historically withstands challenges.
The abrupt imposition of tariffs disrupts international trade agreements. The USMCA bans duties outside its framework but allows “essential security” exceptions—a clause Trump invoked. Critics, such as Canada and Mexico, argue that this violates the agreement’s spirit, risking disputes and settlements. Companies that invested billions in supply chains under stable trade agreements face sudden cost increases, as the tariffs apply to $147.3 billion in steel and aluminum imports, including derivative products like automotive parts, construction materials, and appliances. The sudden policy shift disrupts long-term planning, with firms like Stellantis announcing factory closures and layoffs in response. This unpredictability has led many businesses to pause their investments and employment plans, as they are unable to estimate costs reliably.
US reactions are divided. Steelmakers (Nucor, Cleveland-Cliffs) welcomed tariffs; their stocks surged 11–24% after the 50% hike as foreign competition eased. A White House-cited 2024 study claimed Trump’s first-term tariffs boosted manufacturing reshoring with minimal price impacts. However, downstream industries (automotive, construction) face higher input costs. A 25% tariff adds over $1,000 per car, squeezing margins or raising consumer prices. Trade experts warn that domestic steel producers will inflate prices amid reduced competition.
Consumers bear the brunt. Importers pass tariff costs to buyers, raising prices for vehicles, appliances, and even beverage cans. In 2024, 23% of US steel and nearly half its aluminum were imported (Canada supplied 79% of aluminum). These tariffs, like those applied to automobile imports, can be directly related to Trump’s desire to make Canada the 51st state, which will enflame global sensitivities.
Peterson Institute data show Trump’s 2018 tariffs cost taxpayers $900,000 annually per job saved—questioning economic benefits to Americans. Economists warn that the 2025 tariffs could increase prices by 0.4%, exacerbating affordability issues amid high living costs.
Shareholders risk losses if firms can’t fully pass costs to consumers. Manufacturers like Wisconsin-based Husco have reported squeezed margins as tariffs hit $25 billion in aluminum parts and $15 billion in metal furniture. Uncertainty around Trump’s “Fair and Reciprocal Plan”—which threatens reciprocal tariffs—further strains financial planning and investor confidence.
Critics argue this approach sacrifices long-term stability for short-term protectionism. Canada and the EU plan retaliatory tariffs (e.g., Canada’s $20.7 billion in duties on US goods), which will hurt exporters. Federal Reserve Chair Powell warns tariffs risk inflation and recession as confidence wanes. A March 2025 survey by the New York Fed confirmed rising consumer pessimism. On June 3, the OECD forecasted a substantial decline in US economic growth, greater unemployment, and higher inflation in 2025 and 2026 as a result of these tariffs.
Supporters, however, argue that the tariffs protect vital industries and jobs, citing a 2023 US International Trade Commission report showing reduced Chinese imports and increased domestic production with minimal price impacts during Trump’s first term. They view the tariffs as a necessary correction to trade imbalances, with the US trade deficit reaching $1.2 trillion in 2024. The administration contends that strengthening domestic steel and aluminum capacity ensures national security and economic resilience, even if it causes short-term disruptions.
Conclusion
Trump’s steel and aluminum tariff escalation—from 25% to 50%—reflects a bold but deeply contentious strategy. While potentially legally anchored in Section 232, its shockwaves extend far beyond US borders, disrupting international trade agreements and imposing heavy burdens on businesses, consumers, and shareholders globally. Crucially, this approach ignores a fundamental truth of trade wars: there are rarely winners, only varying degrees of loss.
The tariffs don’t exist in a vacuum. Retaliation is inevitable. Canada and the EU have already threatened billions of dollars in counter-tariffs on US goods, directly targeting American exporters in sectors such as agriculture, whiskey, and manufactured products. Furthermore, the tariffs actively distort global supply chains. Countries needing steel and aluminum will increasingly bypass the expensive US market, turning instead to suppliers like Canada, Brazil, or others that do not face the steep 50% barrier. While this may benefit Canadian producers in the short term, it fractures integrated North American supply chains built over decades, harming efficiency and long-term competitiveness for all involved nations.
The US itself faces a double-edged sword. While domestic steelmakers may see temporary gains, critical US export industries face severe headwinds. Manufacturers of high-value goods like aircraft, military vehicles, and machinery—reliant on competitive metal inputs—will see production costs soar. This erodes their global competitiveness just as retaliatory tariffs make their final products more expensive in key foreign markets. The Peterson Institute’s finding that past tariffs cost $900,000 per job saved underscores the net economic inefficiency.
Ultimately, the debate transcends short-term protectionism versus long-term US stability. It highlights how unilateral actions fracture the global trading system, foster uncertainty, and impose net economic costs worldwide. Tariffs shift problems rather than solve them, creating collateral damage across allied economies and undermining the very security and resilience they purport to defend. In this escalating trade war, the casualties include widespread economic inefficiency, unstable international relationships, and the principle that trade, when governed fairly, can be mutually beneficial.