President Donald Trump has announced a sweeping 25% tariff on all steel and aluminum imports entering the United States, effective March 4, 2025. This move marks a significant expansion of trade restrictions, removing previous exemptions and exceptions from his 2018 tariffs.

The new tariffs apply to all countries without exception, including major suppliers such as Canada, Brazil, and Mexico. For aluminum, this represents an increase from the previous 10% tariff imposed in 2018.

The U.S. relies heavily on imported aluminum, with about 80% of its supply coming from countries like Canada, Mexico, and Brazil. Over the past decade, the share of U.S. steel consumption supplied by domestic mills has varied from 70% to 90%.

Economic Implications

The tariffs are expected to have far-reaching economic consequences:

• A study by the International Trade Commission found that similar tariffs in 2021 led to an additional $2.25 billion in U.S. steel and aluminum production.
• However, industries reliant on these metals experienced a production decline of $3.48 billion, outweighing the gains in the steel and aluminum sectors.

Rising Production Costs: Automakers like General Motors, Ford, and Tesla face higher material costs due to the tariffs. Steel and aluminum are critical components in vehicle manufacturing, particularly for high-demand products like pickup trucks and lightweight vehicles. Analysts estimate that the tariffs could increase the price of an average car by $1,000 to $3,000.

Profit Margins Under Pressure: Automakers are already grappling with elevated interest rates and high monthly payments for new vehicles. The additional costs from tariffs could further squeeze profit margins or force companies to pass costs onto consumers, potentially reducing demand.

Manufacturers with High Domestic Production: Automakers that produce vehicles predominantly within the U.S. using domestically sourced components may experience a competitive advantage. These companies would face fewer cost increases compared to competitors reliant on cross-border supply chains. These companies include Tesla, Ford, General Motors and Dodge. 

Higher Costs for Materials: Steel and aluminum are essential for construction projects, including infrastructure, residential housing, and commercial buildings. The tariffs are likely to drive up prices for these materials, leading to higher overall project costs. Homebuilders are particularly worried about the affordability of new homes, as rising costs for steel, aluminum, lumber, and other materials could make construction more expensive and potentially out of reach for some buyers

Broader Economic Concerns: Industry experts warn that the tariffs could exacerbate inflation in the construction sector by raising the cost of inputs like steel beams, concrete reinforcements, and aluminum components. Smaller contractors may struggle to absorb these increased costs, potentially leading to reduced competition in the market.

Alongside the car and construction industries, aerospace, energy, transportation, packaging, defense and consumer goods manufacturing are likely to be affected by these tariffs. 

Administration’s Rationale

The Trump administration argues that these measures are necessary to:

• Protect U.S. manufacturers from unfair competition.
• Ensure national security by maintaining a strong domestic metal industry.
• Level the playing field in international trade.

Response

In response to President Donald Trump’s announcement of 25 percent tariffs on steel and aluminum imports into the United States, United Steelworkers (USW) International President David McCall has released a statement expressing both support for the effort to address global overcapacity and opposition to tariffs on trusted trade partners like Canada.

McCall stated that steel and aluminum are vital to critical infrastructure and national security, and that a strong domestic industry is essential for building bridges, supplying power, and equipping the military. The USW welcomes President Trump’s actions to address global overcapacity, particularly from countries like China that flood the market.

However, the union draws a distinction between countries like Canada and those that seek to undermine domestic industries. McCall emphasized that Canada is not the problem, noting their cooperation with the U.S. on trade policies to counter unfair foreign trade. He warned that applying across-the-board tariffs would ultimately harm workers on both sides of the border.