President Trump has reinstated a 25% tariff on steel and aluminum imports, impacting even close allies like Canada and Mexico. Effective March 4th, the levies aim to protect US industries and counteract circumvention of existing duties by countries such as Russia and China. Trump insists this will boost domestic production and create American jobs, hinting the tariff rate could increase. An exemption might be considered for Australia due to its import of US aircraft.

The move has had mixed reactions: while shares of Alcoa Corp. and Nucor Corp. experienced slight gains, US equity futures dropped, and the dollar and gold rallied in Asian trade. This action expands on previous trade measures, including tariffs on Chinese goods and potential reciprocal duties on other nations, with cars and semiconductors possibly targeted next.

This is the broadest action taken by Trump yet to address trade deficits and leverage international commerce for revenue, authorized under Section 232 of the Trade Expansion Act. A similar strategy in 2018 saw initial manufacturing gains followed by job losses and sector decline by 2019.

These new tariffs encompass finished products, impacting a wider range of US consumers and industries, from automotive to construction. US Customs will increase oversight to prevent tariff evasion. The initial tariffs in 2018 led to retaliatory measures from trading partners like the EU, and it remains unclear how countries will respond this time. Critics argue the tariffs violate global trading rules, strain relationships with allies, and risk increasing costs for consumers. However, administration officials believe this is part of a broader economic strategy to lower costs overall. The move occurs before Indian Prime Minister Modi’s visit, as India seeks exemptions for its steel exports.