US 50% tariffs on steel and aluminium imports in force – International reactions and implications

President Donald Trump of the United States has enacted an executive order that doubles tariffs on steel and aluminum imports, increasing them from 25% to 50%. This new policy, effective immediately, has raised considerable alarm among business and political leaders, both domestically and internationally.

The Trump administration claims that this measure is intended to safeguard the American steel industry, which the president has labeled as “critical to national security.” However, the administration’s aggressive approach has already led to various repercussions—including canceled orders, increased costs for U.S. companies, and the potential for retaliatory trade actions from significant partners.

While Trump asserts that the aim is to enhance domestic production, data indicate that steel imports had only decreased by 17% in April—before the tariff rise—while overall production levels remained stagnant.

Economists are cautioning that the fallout could be more severe this time. A 2020 study revealed that during Trump’s initial term, the tariffs resulted in approximately 1,000 steel industry jobs created but led to the loss of about 75,000 jobs across other sectors, such as manufacturing and construction.

“It’s incredibly reckless to pursue such measures, especially regarding intermediate industrial goods that elevate production costs throughout the supply chain,” remarked Erica York, vice president of tax policy at the Tax Foundation.

Impact on Small Businesses

Trump’s decision has already sent ripples through many small and medium-sized enterprises. Chad Bartusek, supply chain director at the family-owned Drill Rod & Tool Steels in Illinois, imports roughly 800,000 pounds of Austrian steel each year—a material he notes is not produced to the same specifications in the U.S.

Just last Saturday, Bartusek witnessed his estimated tariff cost for a new shipment soar from $72,000 to $145,000. “It felt like a punch to the gut. I couldn’t believe it,” he expressed. His business has had to raise prices and reduce employee hours as a result.

International Reactions and Temporary Exemptions

While most of the U.S.’s trading partners are affected by the tariff increase, the United Kingdom has received a temporary exemption, keeping tariffs at 25%. Trump attributed this exemption to ongoing trade negotiations with the UK.

In London, the announcement put additional pressure on the government to swiftly finalize a free trade agreement with the U.S. Trade Secretary Jonathan Reynolds conveyed that he was “pleased” UK steel products are still protected and affirmed that negotiations will proceed.

Both the EU and Canada have hinted at possible retaliatory trade measures. Olof Gill, a spokesperson for the European Commission regarding trade, noted that both parties are engaged in “intensive negotiations,” hoping the U.S. will reconsider the new tariffs.

Trump, however, has shown no intent to retract the measure. Speaking at a U.S. Steel factory on Friday, he stated his objective is to make imports so cost-prohibitive that companies will have no option but to rely on domestic sources.