The latest salvo in President Donald Trump’s tariff plan has officially taken effect. His aim is to level the playing field for American manufacturing, but it could also pose risks for the country itself.
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For the first time in President Trump's new term, tariffs on steel and aluminum are applied to all countries in the world. (Source: Getty Images) |
A 25% tariff on all steel and aluminum imported into the US officially took effect on March 12.
This is the first time the European Union (EU) has been affected by higher US tariffs since Mr Trump returned to the White House.
The 27-member bloc has announced tariffs on 26 billion euros ($28.33 billion) of US goods starting next month, while Canada has also targeted $20 billion of US goods in retaliation.
Mr. Trump said he would step up his response to the EU and Canada's retaliation.
Side effect?
For the first time in President Trump's new term, tariffs on steel and aluminum are applied to all countries in the world.
According to many experts, this is a risky "gamble" because it can boost the US steel and aluminum industry, but also risks pushing up the prices of many consumer goods . And this increased cost may be greater than the benefits that the world's largest economy gains.
A similar problem occurred during Mr Trump's first term.
Specifically, in 2018, tariffs on metal exports to the US helped domestic output increase slightly, but it pushed up costs for cars, tools, and machinery.
So, with aluminum and steel, the latest tariffs could backfire on those industries as well.
William Oplinger, CEO of Alcoa, one of the largest aluminum producers in the United States, warned that a 25% tariff could cost 100,000 American jobs, including 20,000 aluminum jobs. Tariffs — especially on Canadian aluminum — would force U.S.-based aluminum companies to lay off workers.
Mr. Oplinger found that the tariffs proposed by the White House boss were not attractive enough for the company to reopen factories in the world's largest economy because electricity costs remained a bigger barrier.
"Businesses also expressed concerns about the uncertainty of tariff policy. This makes it very difficult for businesses to make investment decisions because they do not know how long this policy will last," said Mr. Oplinger.
Meanwhile, Alcoa CFO Molly Beerman emphasized: "While we are very supportive of the government's efforts to improve the aluminum and steel industry, tariffs will bring big problems to businesses. Currently, we are interested in exempting Canada from aluminum and steel tariffs."
Over the past two months, Mr. Phil Gibbs, an analyst at KeyBanc, revealed that steel prices in the US market have increased by more than 30%, while domestic aluminum prices have increased by about 15%.
So far, domestic steel and aluminum buyers have not been affected by the price increases. However, if the tariffs remain in place on all steel and aluminum imported into the United States, customers could end up paying more, even if they buy the products from domestic companies.
However, many American metal business executives support the White House boss, arguing that protectionist measures can increase profits for domestic producers and bring steel and aluminum jobs from abroad to Washington.
The largest US steel companies, including Nucor, United Steel, Cleveland-Cliffs and Steel Dynamics, even urged Mr. Trump not to grant any exemptions.
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| Consumers are feeling the pressure from President Trump's tariffs. (Source: CNN) |
Consumers "freeze" spending
Tariffs are perhaps the biggest problem giving the US economy a headache.
The American consumer and their wallets are a big driver of the economy. But now they are feeling the pinch from President Trump’s tariffs and a falling stock market.
Now, the country's business leaders are sounding the alarm about a freeze in consumer spending, in part due to the White House's policies.
According to the Conference Board's Consumer Confidence Index, consumer confidence recorded its largest monthly decline since 2021 in February 2025.
Airlines also warn that people's travel demand is slowing down and they are also limiting their spending.
Tariffs risk forcing consumers to pay more for a wide range of goods, which would hit growth in the world's largest economy.
Target, Macy's, Kohl's, Home Depot, and other chains expect 2025 to be a tough year as consumers cut back on spending on non-essential items.
"The persistent economic uncertainty has made consumers more cautious. Uncertainty about tariffs will impact the company's earnings this quarter," said Target CEO Brian Cornell.
The 47th President of the United States has recently emphasized that tariffs are part of his economic strategy. He admitted: "There will be a little bit of disruption, but we're okay with that."
Time will tell how this tariff gamble pans out, but for now, uncertainty is rising in the US, as the chairman of the US Federal Reserve (Fed) said at an event in New York on March 7.
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