Key points
- Trump orders 25pc tariffs on steel and aluminium
- US president wants to protect US manufacturers
- US imports roughly a quarter of domestically used steel
ISLAMABAD: United States (US) President Donald Trump has imposed 25 per cent tariffs on all steel and aluminium imports.
The idea, according to the Republican president is simple and straight. He wants to protect US manufacturers from “unfair competition”.
However, some sections could end up paying more for some products that use the metals.
Following Trump’s executive orders, some companies could opt to open new plants in the US to avoid tariffs, while buyers could shift to US-made products rather than pricier imports.
“Our nation requires steel and aluminium to be made in America, not in foreign lands we need to create in order to protect our country’s future resurgence of US manufacturing and production, the likes of which has not been seen for many decades,” Trump said on Monday.
According to the International Trade Administration, the US imports roughly a quarter of domestically used steel, with most of it sourced from Canada and Mexico, along with countries including Brazil, South Korea and Japan.
Our nation requires steel and aluminium to be made in America, not in foreign lands we need to create in order to protect our country’s future resurgence of US manufacturing and production, the likes of which has not been seen for many decades.” – US President Donald Trump
Here’s what experts say could become pricier and who they would affect.
Who pays for tariffs?
Trade experts told CBS MoneyWatch that the US importers pay tariffs on overseas goods directly to the federal government. Therefore, the costs are typically passed onto American consumers.
This means some products that rely on steel and aluminium, such as vehicles and appliances, are likely to become more expensive if the steel and aluminium tariffs go into effect.
“If you put a tax on imported steel and aluminium, you will raise the price of everything that uses that — cars first and foremost,” said Dean Baker, senior economist at The Center For Economic and Policy Research.
A typical car contains roughly 1,000 pounds of steel at a cost of about $6,000 to $7,000 per vehicle, Baker told CBS MoneyWatch.
That means adding a 25 per cent tariff could increase the cost of a car by $1,000 to $1,500, he estimated.
Although some automakers might shift to buying more US-made steel, American manufacturers would also likely boost their prices, taking advantage of the higher costs for foreign-made steel, he added.
How about inflation?
Some economists believe Trump’s plans to rely on tariffs to fulfil his trade and other policy objectives could push inflation up in 2025.
While it’s not clear that Trump will enact all the tariffs he’s outlined – he recently gave a 30-day reprieve to Mexico and Canada in his plan to enact 25 per cent import duties on those countries — the president is also signalling plans to move forward with additional tariffs.
Economists and Wall Street analysts warn that new US tariffs, if sustained, could cause inflation to flare even as many Americans say they continue struggling with the cost of living, CBS News said.
Deutsche Bank economists estimate in a February 10 research report that Trump’s latest proposed steel and aluminium tariffs, plus the reciprocal tariffs, could boost the core personal consumption expenditures price index — a key measure of inflation — by an additional 0.4 percentage points.
