New Steel, Aluminum Tariffs Announced

President Donald Trump announced on February 11 the new tariffs he has been promising. They include tariffs on steel and aluminum imports from all countries, along with 25 percent additional tariffs on imports from Canada and Mexico and a 10 percent additional tariff on imports from China. Energy resources from Canada will have a 10 percent tariff. The tariffs will go into effect March 12.

In its statement, the White House stressed the emergency of fentanyl trafficking, saying Mexican cartels have an “intolerable alliance” with the Mexican government. The White House also claims that “a recent study recognized Canada’s heightened domestic production of fentanyl, and its growing footprint within international narcotics distribution.”

Trump cited the president’s authority under the International Emergency Economic Powers Act (IEEPA). Congress passed IEEPA in 1977 to allow the president to act quickly during declared national emergencies, but also to further refine and restrict presidential power under the Trading with the Enemy Act of 1917. Sen. Chuck Grassley has long argued that the IEEPA and other acts of Congress that delegate Congress’ trade and tariff powers to the president violate the Constitution’s separation of powers.

Trade Imbalances

Trump has also cited trade imbalances as a reason for the tariffs. The statement claims, “While trade accounts for 67percent of Canada’s GDP, 73 percent of Mexico’s GDP and 37 percent of China’s GDP, it accounts for only 24 percent of U.S. GDP. However, in 2023 the U.S. trade deficit in goods was the world’s largest at over $1 trillion.”

Ursula von der Leyden, president of the European Commission, which negotiates trade deals on behalf of the countries of the European Union, responded, “Tariffs are taxes—bad for business, worse for consumers. Unjustified tariffs on the EU will not go unanswered. They will trigger firm and proportionate countermeasures. The EU will act to safeguard its economic interests. We will protect our workers, businesses and consumers.”

She promised counter-tariffs on products designed to target states where support for Trump is strong, and on such American products as bourbon, peanut butter and motorcycles. Some of the EU tariffs have been suspended since Trump’s first term, when they were enacted in response to his earlier tariffs.

European Commission vicepresident Maroš Šefčovič said February 11 that the tariffs are “economically counterproductive, especially given the deeply integrated production chains established through our extensive transatlantic trade and investment ties,” the Associated Press reported.

He added that tariffs are “not our preferred scenario. We remain committed to constructive dialog. We stand ready for negotiations and to find mutually beneficial solutions where possible.”

According to the EU’s figures, total trade in goods reached 851 billion euros ($878 billion) in 2023, with a trade surplus of 156 billion euros ($161 billion) for the EU. Trade in services was worth 688 billion euros ($710 billion) with a trade deficit of 104 billion euros ($107 billion) for the EU.

Steel Imports Up

American steel importers and customers anticipated the tariffs by increasing their stockpiles. Based on the Commerce Department’s most recent Steel Import Monitoring and Analysis (SIMA) data, the American Iron and Steel Institute (AISI) reported on February 6 that steel import permit applications for the month of January totaled 2,922,000 net tons, a 23.4 percent increase from the 2,369,000 permit tons recorded in December and a 36.8 percent increase from the December final imports total of 2,135,000. Import permit tonnage for finished steel in January was 2,227,000, up 22.2 percent from the final imports total of 1,822,000 in December. The estimated finished steel import market share in January was 25 percent.

Steel imports with large increases in January permits vs. the December final imports include reinforcing bars (up 178 percent), heavy structural shapes (up 174 percent), blooms, billets and slabs (up 122 percent), oil country goods (up 72 percent) and line pipe (up 66 percent).

On January 21, Kevin Dempsey, president and CEO of the American Iron and Steel Institute, said, “We welcome President Trump’s commitment to treating trade policy as a critical component to national security and to pursuing a robust and reinvigorated trade policy agenda to tackle many of the issues that are priorities for the American steel industry. These include: addressing foreign unfair trade practices and currency manipulation, ensuring full enforcement of our existing trade agreements and leveling the playing field by strengthening our antidumping and countervailing duty laws, including addressing the growing problem of transnational subsidies. Urgent action is needed to respond to these challenges not only from China but also from many other countries around the world.”

Nippon To Abandon U.S. Steel Takeover Effort

Trump told reporters aboard Air Force One on the way to the Super Bowl that Nippon Steel would not be allowed to buy a majority stake in U.S. Steel but would invest in it. The proposed $14.3 billion takeover deal had already been blocked by President Joe Biden on January 3 in one of his last acts in office.

Trump said his proposed new tariffs on steel and aluminum would help U.S. Steel make a comeback from what he said was bad management in the past. On February 10, Japan’s Chief Cabinet Secretary Yoshimasa Hayashi said Nippon was considering “a bold proposal that is completely different from anything it has done in the past” in regard to its plans for U.S. Steel, raising speculations about some kind of partnership.