U.S. President Donald Trump's bulked-up tariffs on steel and aluminum due to launch within hours will hit nearly $150 billion worth of derivative products made from the metals for the first time, ranging from nuts and bolts to bulldozer blades and threatening cost increases for industry and consumers alike.
Trump lashed out at Canada on Tuesday over its retaliation for his prior tariffs, doubling the import duty rate for Canadian steel and aluminum to 50%, while keeping rates for all other countries at 25% and rescinding prior exemptions, exclusions and quotas. The actions are due to take effect at 12:01 a.m. EDT (0401 GMT) on Wednesday.
A Reuters analysis of the products listed for new tariffs under Trump's plan would subject a wide range of imported automotive and tractor parts, metal furniture, construction materials and machinery parts to the tariffs.
Total 2024 import value for the 289 product categories came to $147.3 billion with nearly two-thirds aluminum and one-third steel, according to Census Bureau data retrieved through the U.S. International Trade Commission's DataWeb system.
By contrast, Trump's first two rounds of punitive tariffs on Chinese industrial goods in 2018 during his first term totaled only $50 billion in annual import value.
The tariffs will hit over $25 billion worth of imported aluminum components for cars, trucks, buses, tractors and specialty vehicles, and $15 billion worth of metal furniture and parts imports, the analysis showed.
Canada and Mexico, the two largest sources of the metals imports, would be the hardest hit. The two biggest U.S. trading partners also are battling separate, 25% duties on all products imposed in Trump's drive to eradicate fentanyl trafficking. Those are largely paused for goods compliant with the U.S.-Mexico-Canada Agreement on trade's rules of origin.
Steelmakers and aluminum producers have long argued that the proliferation of exemptions and quotas eroded the effectiveness of his first-term Section 232 tariffs imposed in 2018, which gave a temporary lift to U.S. steel and aluminum capacity use.
"These are not the steel and aluminum tariffs of the last time," said Dan Ujczo, a trade lawyer specializing in U.S.-Canada trade matters. "These are the very products that consumers will feel on the shelves, in the construction industry in particular, and automotive."
Ujczo, senior counsel at Thompson Hine in Columbus, Ohio, said some of the firm's real estate clients are putting development projects on hold because they cannot accurately estimate materials costs over the next six to 12 months due to tariff uncertainty.
Trump's goals in imposing the metals tariffs are to strengthen steel and aluminum production and bring more manufacturing and jobs to U.S. shores. It's part of an onslaught of tariff actions in his first weeks in office that will culminate in reciprocal tariffs on April 2 that aim to match other countries' tariff rates and counteract their non-tariff trade barriers.
WEIGHING PRICE HIKES
But equipment manufacturers in Wisconsin say the new metals tariffs may simply raise costs because much of the supply base for small metal components has moved offshore. Several say they are weighing price hikes.
Husco, a Waukesha, Wisconsin-based maker of hydraulic components for automotive and construction equipment, buys steel domestically but will see cost increases across its supply chain, especially for smaller imported components like machined steel parts, said CEO Austin Ramirez.
The firm began moving some work out of China after Trump slapped tariffs on Chinese industrial goods in 2018, but this would be difficult for components with high labor content due to U.S. wage costs, he said.
"The more dominant impact will be higher cost on our inputs," Ramirez said, adding that for many parts, even paying 25% tariffs would still be cheaper than trying to set up domestic production or trying to find U.S. suppliers, he said.
Farm equipment manufacturers would likely announce price hikes within a week or two, as the tariffs would likely boost domestic steel prices, said Kip Eideberg, head of government relations for the Association of Equipment Manufacturers.
Midwest hot-rolled steel futures prices have risen more than 21%, or $166 a ton, to $925 since Trump announced the tariff revisions.
"If it's 8% more expensive to build tractors and combines in the U.S., some of that inevitably, unfortunately will be passed down to the customers," Eideberg said.
METALS RESHORING
Whether Trump's tariffs will bring metals work back or make some U.S. manufacturers less competitive with global peers is an open question.
But Alan Price, a lawyer who leads Wiley Rein's trade practice in Washington, said they could help counteract policies such as Mexico's IMMEX program, which allows foreign companies, including U.S. manufacturers, to import components duty-free into Mexico for assembly into finished products for export to the United States.
"Certainly, extending (tariffs) to these downstream products closes additional loopholes and reduces the attractiveness of shifting production outside the U.S.," Price said, adding that the tariffs would also incentivize manufacturers to use more U.S.-produced steel and aluminum.
Unlike with the fentanyl-related tariffs, Trump has shown no sign of easing up ahead of the midnight deadline. He is expected to hear tariff concerns from top U.S. corporate CEOs on Tuesday afternoon.
The White House declined comment on potential cost increases from the tariffs, which it said were an extension of Trump's first-term America First economic agenda to rebuild the U.S. industrial base, cut taxes and increase American energy production.
"In his second term, President Trump will again use tariffs to level the playing field for American workers and reignite America’s industrial might," White House spokesperson Kush Desai said in a statement.
