Donald Trump has officially ramped up tariffs on all steel and aluminium imports to 25%. The 78 year old US President believes these taxes will stimulate factory job creation across the US.
However, his fluctuating tariff threats have sent shockwaves through the stock market, sparking concerns of an economic slowdown. The trade wars have even led to a decrease in the wealth of some of the world’s richest individuals, including Elon Musk.
The UK steel industry has voiced its concern, stating that the global leader’s tariffs “couldn’t come at a worse time”. It is believed that the UK government is unlikely to retaliate immediately to the hefty import tax.
Defiant Mr Trump has removed all exemptions from his 2018 tariffs on metals, as well as increasing the tariffs on aluminium from 10%. These actions, based on a directive from February, are part of a wider effort to disrupt and reshape global commerce.
The President has separate tariffs on Canada, Mexico and China, with plans to also tax imports from the European Union, Brazil and South Korea by charging “reciprocal” rates starting on April 2, reports The Mirror.
Mr Trump informed CEOs at the Business Roundtable on Tuesday that the tariffs were prompting companies to invest in US factories. Despite the SandP 500 stock index dropping 8% over the past month due to fears of deteriorating growth, Mr Trump remains undeterred.
He argues that higher tariff rates would be more effective at reviving factories.
Mr Trump addressed the assembly, saying: “The higher it goes, the more likely it is they’re going to build. The biggest win is if they move into our country and produce jobs. That’s a bigger win than the tariffs themselves, but the tariffs are going to be throwing off a lot of money to this country.”
Following tariff threats on Tuesday that could have seen steel and aluminium imports from Canada hit with a 50% rate, President Trump opted to maintain a 25% tariff after Ontario paused its consideration of an electricity surcharge affecting sales to Michigan, Minnesota and New York.
UK Steel’s director general Gareth Stace described the decision as “hugely disappointing”, pointing out: “President Trump must surely recognise that the UK is an ally, not a foe. Our steel sector is not a threat to the US but a partner to key customers, sharing the same values and objectives in addressing global overcapacity and tackling unfair trade.”
He continued his critique by highlighting the timing of the tariffs: “These tariffs couldn’t come at a worse time for the UK steel industry, as we battle with high energy costs and subdued demand at home, against an oversupplied and increasingly protectionist global landscape. What’s more, the EU is also pushing ahead with trade restrictive action that will amplify the impact of US tariffs.”
The White House has acknowledged that automotive giants Volvo, Volkswagen, and Honda are considering expanding their operations in the US. However, they face the dilemma of potentially higher prices and lower profits, which could deter them from investing in new facilities.
John Murphy, a top figure at the US Chamber of Commerce, questioned the timing for such expansions, saying: “If you’re an executive in the boardroom, are you really going to tell your board it’s the time to expand that assembly line?”.
Meanwhile, on this side of the pond, the Prime Minister’s official spokesperson has assured that the government is “engaging closely with the US and we remain prepared to defend the UK’s national interest where it’s right to do so”.