Trump imposes 25% tax on aluminum and steel: Is a world trade war about to begin?

On February 9, US President Donald Trump announced that he would expand the trade war to the metals sector with a 25% tariff on aluminum and steel from all countries.

A steel product factory in China's Anhui province, one of the largest steel exporters to the US - Photo: AFP

And this week, the Trump administration will announce reciprocal tariffs targeting imports from countries that impose tariffs on US exports.

Tax response tax

A 25% import tariff on all aluminum and steel imported into the US may be just one part of a tough tariff strategy that Mr Trump is just beginning.

"It's very simple, they tax us, we tax them... Tariffs will help," Reuters news agency quoted Mr. Trump as telling reporters on the way to the Super Bowl on the evening of February 9. The tariffs will take effect "almost immediately".

Tariffs on imported metals, supported by some unions and U.S. manufacturers, threaten to raise input costs for many manufacturers. In 2023, the U.S. imported $82.1 billion worth of iron and steel and $27.4 billion worth of aluminum, while exporting $43.3 billion and $14.3 billion, respectively.

However, Mr. Trump said he would pave the way for countries like Japan to invest heavily in the US. "Tariffs will help [the US steel industry] be very successful," the US leader confidently said.

Mr Trump’s tariff tactics have prompted a swift response from US partners. Australian Prime Minister Anthony Albanese has argued that Canberra’s steel and aluminium exports help create jobs in the US. In Asia, South Korea’s Ministry of Trade, Industry and Energy held an emergency meeting with steel industry executives on February 10 to discuss how to respond.

Meanwhile, Thai Finance Minister Pichai Chunhavajira said the country would increase imports of US goods to reduce its trade surplus. This week, Indian Prime Minister Narendra Modi will be in Washington with tax concessions to boost exports to the US and avoid a trade war.

Last week, Mr Trump's first steps toward threatening 25% tariffs on Canada and Mexico were successful after the two neighboring partners caved in to his demands.

Long term strategy

The new tariffs continue a series of aggressive trade policies by Mr Trump that have rattled global currency markets. They have also raised concerns about a new surge in US inflation and a trade war with Washington’s biggest trading partners.

Unlike his previous term when Mr. Trump also used tariff tactics to pressure countries, Trump 2.0 administration officials said that what happened in the past three weeks is only a small part of Mr. Trump's trade agenda.

During his previous term, Mr. Trump also imposed 25% tariffs on imported steel and 10% on imported aluminum but later exempted some trading partners, including Canada and Mexico. Meanwhile, China has not fully implemented the phase 1 agreement reached with the United States.

These tariffs will not be avoided with a few phone calls. “Structural tariffs will become a reality,” said Republican Senator Bernie Moreno.

Meanwhile, former Republican Senator Phil Gramm warned in an article in the Wall Street Journal that protectionist tariffs distort domestic manufacturing... In the process, productivity, wages and economic growth decline while prices rise. "Tariffs and retaliation also poison our economic alliances and security," Gramm said.

Previously, President Trump also pledged to impose tariffs on imported computer chips, pharmaceuticals, copper, oil and gas as early as mid-February 2024, according to the Wall Street Journal.

What Mr. Trump has done so far is in line with his inauguration statement that “tremendous amounts of money are pouring into our treasury from foreign sources.” But so far, Mr. Trump’s quick suspension of 25% tariffs on Canada and Mexico has given hope to America’s partners.

“I think this reinforces the feeling on this side of the Atlantic that he finally wants to negotiate,” a European Union diplomat told the Wall Street Journal.

Europe is ready for war

On February 10, the European Commission affirmed that it will respond to protect the interests of the European Union (EU) but will continue to wait until it receives official notice from the US.

“We will react to protect the interests of European businesses, workers and consumers from unjustified measures,” the commission said.

In 2018, the EU responded to US tariffs with duties on more than $3 billion worth of US goods, and the bloc could use those measures again.

Meanwhile, China has since dramatically reduced its dependence on US products. “Their retaliation shows how prepared they are. They have a lot of weapons in their arsenal,” said Wendy Cutler, vice president of the Asia Society Policy Institute.

Source: https://tuoitre.vn/ong-trump-ap-thue-25-len-nhom-thep-thuong-chien-the-gioi-sap-bat-dau-20250210225705446.htm