This week, reciprocal tariffs will also be announced.
Author: Jin Shi Data
U.S. President Trump stated that he will announce a 25% tariff on all imported steel and aluminum on Monday.
On Air Force One, Trump told reporters on Sunday that the tariffs would apply to metals imported from all countries. He did not specify when the tariffs would take effect.
He also mentioned that he would announce reciprocal tariffs on countries that impose tariffs on U.S. imports later this week. Trump said these tariffs would not take effect on the same day they are announced, possibly on Tuesday or Wednesday, but would take effect soon.
These measures are the latest in a series of actions by Trump to threaten tariffs against various countries and specific industries.
The overall scale of Trump's tariff ambitions remains unclear. He also indicated that he would impose tariffs on other goods, including drugs, oil, and semiconductors, and mentioned that he is considering imposing import tariffs on the European Union.
Trump has vowed to impose tariffs on countries like Canada and Mexico, accusing them of not doing enough to help stop illegal drugs and undocumented immigrants from crossing the U.S. border. However, last week, Trump suspended plans to impose a 25% tariff on these two North American countries, as their governments made moderate commitments to help address his concerns about border issues. The suspension of tariffs on Canada and Mexico is in effect until March 4.
While Trump may reverse course and take action to impose trade taxes again, this decision deepens the perception that the new president is reluctant to follow through on his tariff threats and is more inclined to use tariffs as a negotiating tool. Trump has positioned tariffs as central to reshaping the U.S. economy, reducing the trade deficit, and finding new sources of revenue to help achieve his tax agenda.
Economists believe that tariffs will raise costs for U.S. manufacturers of imported goods, increase prices for consumers who are already weary of inflation, reduce trade flows, and fail to generate the revenue Trump has predicted.
The Trump administration and its allies view the commitments made by Mexico and Canada to take action at the border as a victory for the president's policy.
One of Trump's trade advisors, Peter Navarro, said last week at an event hosted by Politico, "We saw a lot of surprise when this policy was announced, but we also saw immediate effects on the policies regarding Mexico and Canada."
As this news comes out, the U.S. steel industry is seeking to recover from its worst year since Trump's first term. Domestic steel manufacturers complain that the renewed increase in imports has harmed their profits and output.
The steel and aluminum tariffs are among the first tariffs imposed during Trump's first term; in 2018, Trump imposed a 25% tariff on steel and a 10% tariff on aluminum, citing national security.
At the same time as the steel tariffs were imposed, a deal for Japan's Nippon Steel Corp. to acquire U.S. Steel Corp. for $14.1 billion has also stalled. This deal was blocked by former President Biden, and Trump opposed it as well.
After meeting with Japanese Prime Minister Shigeru Ishiba last Friday, Trump stated that Nippon Steel is now considering investing in U.S. Steel rather than directly acquiring the company. Trump told reporters on Sunday that Nippon Steel cannot own a majority stake in U.S. Steel. The two companies are challenging the U.S. blocking of the deal in court.
As a result of this news, the U.S. dollar index rose significantly in early trading, while commodity currencies fell sharply. As of the time of writing, the dollar index was up 0.64% at 108.39; the AUD/USD was down 0.56% at 0.6248; and the USD/CAD was up 0.47% at 1.4369.
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