President Donald Trump imposed a sweeping 25 per cent tariff on all steel and aluminium imported into the United States on Wednesday, a move that threatens to drive up prices on a broad range of consumer and industrial goods for Americans.
It's the latest salvo in Trump's multifaceted tariff war aimed at correcting perceived trade imbalances and reigniting domestic manufacturing.
Hours before enacting the latest tariffs, Trump reversed a threat to double the rate on steel and aluminium from Canada, the US's top source of imports for the metals.
Instead, steel and aluminium from there will be subject to the 25 per cent levy.
"It may go up higher," Trump said Tuesday of the 25per cent tariff on all countries' steel and aluminium sent to the US at an event hosted by the Business Roundtable.
"The higher it goes, the more likely it is they're going to build," he said, referring to more companies moving their production to the US.
Trump backed off his threat to double the steel and aluminium tariff rates for Canada after Ontario Premier Doug Ford agreed to pause surcharges on electricity for US customers.
Ford and US Commerce Secretary Howard Lutnick announced they'd meet on Thursday, along with Canadian Finance Minister Dominic LeBlanc, to renegotiate the free trade treaty known as the USMCA.
The tariff on steel and aluminium marks the first time in Trump's second term that a tariff has been applied to all countries.
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Before Wednesday, Trump had only enacted tariffs that applied to China, Mexico and Canada this term.
In the case of Mexico and Canada, businesses can avoid paying tariffs through until April 2 if they comply with the USMCA.
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Shortly before they went into effect, Australian Prime Minister Anthony Albanese criticised the tariffs as "entirely unjustified" and "against the spirit of our two nations' enduring friendship," but said Canberra will impose no reciprocal levies.
"Tariffs and escalating trade tensions are a form of economic self-harm and a recipe for slower growth and higher inflation," he said in a statement.
"This is why Australia will not be imposing reciprocal tariffs on the United States."
Steel tariffs of 25 per cent launched in Trump's first administration and continued by former President Joe Biden resulted in American importers shifting to other sources.
However, the Biden administration had allowed for exceptions on the duties from US allies, including Canada, Mexico, Japan and South Korea.
Trump's latest action reverses that with no exceptions on any countries' steel imports to the US. The same applies for aluminium, with rates climbing to 25 per cent from 10 per cent.
China is the only country whose aluminium and steel will be tariffed at rates higher than 25 per cent.
That's because a 20 per cent across-the-board tariff on Chinese imports was already in effect prior to Wednesday, and the 25 per cent steel and aluminium tariff will be tacked on top of that, bringing the total tariff rate to 45 per cent on steel and aluminium from there.
America imports very little steel directly from China, by far the world's largest producer of steel.
Yet Chinese steel does make its way into the United States secondhand.
Some is purchased by foreign countries and reshipped to the US.
And some of it is mislabeled and resold through various channels.
From cars to appliances, steel and aluminium are critical inputs
While Trump's aim is to hurt the Canadian economy by imposing higher steel and aluminium tariffs on them, the move risks hurting the American economy as well.
In total, the US imported $49.7 billion ($US31.3 billion) worth of iron and steel and $43.5 billion($US27.4 billion) of aluminium last year, according to data from the US Commerce Department.
(The government data groups iron and steel together.)
Canada was the top source of iron, steel and aluminium sent to the US last year, with the US importing $11.4 billion worth of aluminium and $7.6 billion worth of iron and steel from there.
With aluminium, other top foreign sources shipping to the US include China, Mexico and the United Arab Emirates.
With steel, Brazil, Mexico and South Korea are top sources, according to US trade data from last year.
Aluminium and steel are used heavily in an extensive list of goods. Tariffs on both metals could significantly raise prices for Americans.
For instance, cars contain hundreds, if not thousands, of pounds of steel and aluminium.
So, while Trump said his "substantially" higher auto tariffs will "shut down" the auto industry in Canada, they are more likely to backfire on US auto production, given how intertwined the North American car supply chain is.
Appliances, machinery, infrastructure, medical devices, cans and power lines are all among the many commonly used products that also rely on steel and aluminium.
Even before Wednesday, the prospect of higher tariffs on steel and aluminium led to sharp increases in market-traded spot prices for the metals, said Phil Gibbs, analyst with KeyBanc.
The price of domestic steel is up more than 30 per cent in the last two months, he said, while the domestic price of aluminium has risen about 15 per cent.
Many large industrial customers might be protected from those price increases in the near term because of long-term contracts they've locked in, but should the steel and aluminium tariffs stay in place, they can expect to pay more even if the products they are buying come from domestic mills.
And the tariffs are likely to affect not only the raw products being imported but also the cost of imported parts made using the metals.
For instance, the price of an aluminium bumper or radiator purchased by an automaker from a Canadian or Mexican parts supplier would likely increase.
