Trump Announces Higher Steel and Aluminum Tariffs, Risks Inflation and Promises More Jobs

Trump on February 10 canceled exceptions and exemptions to the 2018 steel tariffs, meaning all steel imports will be subject to at least a 25% tariff. Trump also raised the 2018 aluminum tariff from 10% to 25%.

"It's time for our great industry to return to the United States," Trump said as he signed two proclamations that changed his first-term orders. The two proclamations will take effect on March 4.

Trump said raising taxes on individuals and companies that buy foreign products will ultimately strengthen domestic manufacturing. But according to the American Iron and Steel Institute, the tariffs will hit allies because the four largest sources of steel imports to the United States are Canada, Brazil, Mexico and South Korea.

Trump also intends to reset U.S. tariffs on all imports this week to bring them in line with tariffs imposed by other countries. In addition to Trump's 10% tariff on China, the United States also plans to impose tariffs on Canada and Mexico, but these tariffs have been suspended until March 1.

The new tariffs immediately drew criticism from Canada, the largest source of steel imports. Candice Lane, president and CEO of the Canadian Chamber of Commerce, said Trump is a destabilizing force in the global economy. "Today's news makes clear that permanent uncertainty will persist," Lane said.

Tariffs pose inflation risks at a time when voters are tired of high prices and worry that rising prices will offset income growth. Trump insists that tariffs will create a fair competitive environment for international trade and make American factories more competitive, so "any pain consumers and businesses suffer will ultimately be worth it."