The US tariff rate on most imported steel and aluminium will double on Wednesday (Jun 4) as President Donald Trump ratchets up a global trade war on the same day he expects trading partners to deliver their “best offer” in bids to avoid punishing import tax rates on other goods from taking effect in early July.
Trump late on Tuesday signed an executive proclamation that puts into effect from Wednesday his surprise announcement last week that he was taking the tariffs on steel and aluminium imports that had been in place since March to 50 per cent from 25 per cent.
“We started at 25 and then after studying the data more, realised that it was a big help, but more help is needed. And so that is why the 50 is starting tomorrow,” White House economic adviser Kevin Hassett said in explaining the move at a steel industry conference in Washington on Tuesday. The increase comes into effect at 12.01am (12.01pm Singapore time).
The increase applies to all trading partners except Britain, the only country so far that has struck a preliminary trade agreement with the US during a 90-day pause on a wider array of Trump tariffs. The rate for steel and aluminium imports from the UK – which does not rank among the top exporters of either metal to the US – will remain at 25 per cent until at least Jul 9.
About a quarter of all steel used in the US is imported, and Census Bureau data shows the increased levies will hit the closest US trading partners – Canada and Mexico – especially hard. They rank No 1 and 3, respectively, in steel shipment volumes to the US.
Canada is even more exposed to the aluminium levies as the top exporter to the US by far at roughly twice the rest of the top 10 exporters’ volumes combined. The US gets about half of its aluminium from foreign sources.
The unexpected increase in the levies jolted the market for both metals this week, especially for aluminium, which has seen price premiums more than double so far this year. With little current capacity to increase domestic production, import volumes are likely to be unaffected unless the price increases undercut demand.
