U.S. Drastically Increases Steel and Aluminum Import Taxes

President Donald Trump has approved a sharp rise in tariffs on imported steel and aluminum, pushing the levy from 25% to a new high of 50%.

This policy shift marks the second time tariffs on these metals—integral to industries like automotive and food packaging—have increased since March.

Trump defended the measure, stating on Wednesday that it is designed to bolster the domestic steel sector.

Still, the decision has stirred alarm among critics, who argue it may disrupt overseas metal producers, trigger retaliation from other countries, and place a heavy burden on American companies that depend on these imports.

Many businesses caught in the crossfire were stunned in the lead-up to the move. They hoped the hike might be a bluff or part of a broader negotiation rather than a permanent change.

One notable exception to the hike was the United Kingdom, which retained the previous 25% rate. Trump said this was a result of “ongoing trade discussions” between the two nations.

“Always the question with Mr Trump is, is this a tactic or is this a long-term plan?” said Rick Huether, head of Independent Can Co, a Maryland manufacturer that turns imported European steel into decorative tins and packaging.

Following earlier tariff increases, Huether put expansion plans on hold and raised prices. He feared the rising costs might push his customers toward alternative packaging materials like paper or plastic.

“There’s a lot of chaos,” he said.

Globally, the U.S. is one of the top consumers of steel, ranking just behind the EU. It sources much of its supply from countries including Mexico, Brazil, Canada, and South Korea.

Trump’s administration originally introduced 25% steel and 10% aluminum tariffs during his first term, invoking national security concerns.

However, exemptions were eventually extended to various trade allies and companies, softening the overall impact.

In March, Trump withdrew many of those exemptions, expressing dissatisfaction with how the previous framework had been diluted.

While speaking at a U.S. Steel site on Friday, Trump expressed his intent to make imported steel so expensive that domestic buyers would have no choice but to turn to U.S. suppliers.

“Nobody’s going to get around that,” he said of the 50% rate. “That means that nobody’s going to be able to steal your industry. It’s at 25% – they can get over that fence. At 50%, they can no longer get over the fence.”

International Concerns and Fallout

Despite the increased tariffs, recent data shows little change in the U.S. steel production rate compared to the same time last year. But steel imports dropped sharply—falling 17% between March and April—and more declines are anticipated as the new rates take hold.

Canada and the EU, both affected by previous U.S. tariff moves, have already signaled their readiness to retaliate.

An EU trade official said on Tuesday that “We’re negotiating hard to try and make good deals,” as conversations between the two sides continue.

“We really hope that the Americans will roll back on this latest tariff threat, as they have done on others, but that remains to be seen.”

In the UK, the announcement has intensified pressure to finalize a trade deal with Washington, especially one that would shield British industries from further disruptions.

UK Trade Secretary Jonathan Reynolds recently met with U.S. Trade Representative Jamieson Greer in Paris.

Afterward, his office shared optimism about the talks, saying it was “pleased” that British steel was spared the full tariff.

“We will continue to work with the US to implement our agreement, which will see the 25% US tariffs on steel removed,” he said.

Gareth Stace, who leads UK Steel, noted that many of the organization’s members had already experienced canceled orders due to the 25% tariff set earlier this year.

He warned the newly announced 50% level could devastate the UK’s steel exports to the United States, which currently account for around 7% of their total.

“The introduction of 50% tariffs immediately puts the shutters up,” he said. “Most of our orders, if not all of them, will now be cancelled.”

Backlash at Home

U.S. industries are also bracing for the impact. Analysts predict rising prices across multiple sectors as manufacturers pass on the cost increases to consumers.

A previous study from 2020 estimated that while Trump’s earlier tariffs supported about 1,000 new jobs in steel, they resulted in approximately 75,000 job losses across industries like construction and manufacturing.

Erica York of the Tax Foundation believes the effects this time could be even worse.

“Some of the strongest evidence is against tariffs on intermediate inputs like steel and aluminium, finding they are much more harmful because they increase the cost of production in the United States,” she said. “It’s just very foolish to double down on this type of tariff in particular.”

One of the many American manufacturers now feeling the pinch is Drill Rod & Tool Steels, a small Illinois-based business run by a family.

Chad Bartusek, the company’s supply chain director, said they import around 800,000 pounds of Austrian steel annually—grades that aren’t made domestically.

Earlier this year, he expected to pay roughly $72,000 in tariffs. Now, that bill has nearly doubled to $145,000.

“I woke up Saturday morning, looked at the news and my jaw dropped,” he said of Trump’s announcement.

The company had recently upped prices by between 8% and 14% to stay afloat. As orders began slowing, they were forced to reduce employee hours.

“It’s one punch after the other,” he said. “Hopefully, this settles down quickly.”