Trump’s Steel and Aluminum Tariffs Take Full Effect, Rattling Markets and Trade Partners

The ripple effects of Donald Trump’s intensified trade policies are being felt across the globe as his increased tariffs on steel and aluminum imports officially took effect Wednesday. This action signifies a determined step toward reshaping global trade norms in favor of the United States, as numerous prior exemptions, duty-free quotas, and product exclusions have now expired.

The move effectively reinstates a 25% global tariff on all steel and aluminum imports, extending the duty to a vast array of downstream products manufactured from these metals. From nuts and bolts to heavy machinery components like bulldozer blades, and even everyday items like soda cans, a significant portion of goods will now be subject to these higher tariffs.

The days leading up to the tariff deadline were marked by considerable uncertainty, particularly regarding relations with Canada. President Trump initially threatened to double the duty on Canadian steel and aluminum exports to the U.S., pushing it to a staggering 50%. This potential escalation was averted after Ontario Premier Doug Ford agreed to temporarily suspend his province’s surcharge on electricity exports to Minnesota, Michigan, and New York, a surcharge put in place until earlier U.S. tariffs were repealed.

Ford is scheduled to travel to Washington with Canadian Finance Minister Dominic LeBlanc to engage in discussions with Commerce Secretary Howard Lutnick and other Trump administration officials. The primary goal of these talks will be to explore possible revisions to the U.S.-Mexico-Canada Agreement (USMCA) on trade.

The abrupt shift in Trump’s stance toward Canada injected volatility into U.S. financial markets, which were already sensitive to the broader implications of the President’s aggressive tariff strategy. Despite the momentary uncertainty, Trump’s core plan to bolster the Section 232 national security tariffs on steel and aluminum, initially imposed in 2018 during his first term, remains unchanged.

A White House spokesperson characterized the U.S.’s pressure on Canada as a significant "win" for the American economy.

The U.S. Customs and Border Protection agency preemptively halted imports qualifying for duty-free entry under quota arrangements well before the official deadline. In a bulletin issued to shippers, the agency stated that quota paperwork needed to be fully processed at U.S. ports of entry by 4:30 p.m. local time on Tuesday to avoid being subjected to the full tariff rates.

The move was welcomed by domestic steel producers, who see it as a restoration of Trump’s original 2018 metals tariffs. They argue that these tariffs had been significantly weakened by numerous country exclusions, quotas, and thousands of product-specific exclusions.

Philip Bell, President of the Steel Manufacturers Association, issued a statement emphasizing the potential positive impact of the revised tariff. "By closing loopholes in the tariff that have been exploited for years, President Trump will again supercharge a steel industry that stands ready to rebuild America," Bell stated. "The revised tariff will ensure that steelmakers in America can continue to create new high-paying jobs and make greater investments knowing that they will not be undercut by unfair trade practices."

The countries most heavily affected by these tariffs include Canada, which is the largest foreign supplier of both steel and aluminum to the United States, as well as Brazil, Mexico, and South Korea. All of these nations had previously enjoyed some level of exemptions or quotas.

The escalation of the U.S.-Canada trade tensions also coincides with a transition of power in Canada, as Prime Minister Justin Trudeau prepares to hand over the reins to Mark Carney, who recently won the leadership race of the ruling Liberals.

On Monday, Carney acknowledged that he would refrain from engaging in direct discussions with Trump until he was officially sworn in as Prime Minister. Trump, however, continued to express his desire for closer ties with Canada, suggesting on social media that he wanted Canada "to become our cherished Fifty First State."

Canadian energy minister Jonathan Wilkinson indicated that Canada could respond to persistent U.S. tariffs with non-tariff measures, such as restricting oil exports to the U.S. or imposing export duties on minerals.

Canada currently ships approximately 4 million barrels of crude oil to the U.S. daily via pipeline, primarily supplying refineries in the Midwest. Wilkinson also suggested that Canada could consider implementing tariffs on American ethanol.

While most U.S.-Canada trade remains duty-free under the USMCA trade deal signed by Trump in 2020, the President continues to voice concerns about Canada’s high tariff rates for dairy products. Ottawa recently secured a temporary reprieve for USMCA-compliant exports from Trump’s general 25% tariffs for Canada, which were threatened due to concerns over fentanyl trafficking.

Earlier in April, Canada also faced Trump’s reciprocal tariffs, designed to raise U.S. tariffs to match other countries’ rates and counteract non-tariff barriers.

Canada, with its abundant hydropower resources that make primary aluminum production more cost-effective than in the U.S., has established a strong position in the U.S. aluminum market. This has occurred even as U.S. smelters, which were initially revived by Trump’s tariffs, have been idled.

China remains the second-largest supplier of aluminum and goods made from aluminum. However, it already faces significant tariffs aimed at addressing alleged dumping and subsidies, as well as a new 20% tariff imposed by Trump over the past month due to concerns about fentanyl trafficking.

Trump’s intense focus on tariffs since taking office in January has contributed to a decline in investor, consumer, and business confidence. Many economists are increasingly concerned that these actions could trigger a recession.

A small business survey conducted on Tuesday revealed a weakening of sentiment for the third consecutive month, effectively erasing the confidence boost that followed Trump’s election victory. A separate survey of households by the New York Federal Reserve on Monday indicated that consumers are becoming more pessimistic about their financial situations, inflation, and the job market. These economic indicators highlight the potential risks associated with Trump’s aggressive trade policies.