Donald Trump doubles US steel and aluminium tariffs to 50%

US President Donald Trump has signed an order doubling tariffs on steel and aluminium imports from 25% to 50%.

The move hikes import taxes on the metals, which are used in everything from cars to canned food, for the second time since March.

Trump has said the measures, which came into effect on Wednesday, are intended to secure the future of the American steel industry.

However, critics say the protections could wreak havoc on steel producers outside the US, spark retaliation from trade partners, and come at a punishing cost for American users of the metals.

Hours before he hiked the duties, many firms directly affected could hardly believe the plan was moving forward, hoping it would turn out to be temporary or some kind of negotiating ploy.

Even as Trump signed the orders, the UK was granted a carve-out from the measures, leaving duties on its steel and aluminium at 25%, a move Trump said reflected its ongoing trade discussions with the US.

“Always the question with Mr Trump is, is this a tactic or is this a long-term plan?” said Rick Huether, chief executive of Independent Can Co, a Maryland-based business, which brings in steel from Europe and turns it into decorative cookie tins, popcorn boxes, and other products.

Trump’s moves earlier this year had prompted him to put investments on hold and raise prices. He said he feared his customers would turn to alternatives such as plastic or paper boxes due to all of the uncertainty.

“There’s a lot of chaos,” he said.

The US is the biggest importer of steel in the world, after the European Union, getting most of the metal from Canada, Brazil, Mexico and South Korea, according to the US government.

During his first term, Trump imposed tariffs of 25% on steel and 10% on aluminium, citing a law that gives him authority to protect industries considered vital to national security.

But many imports ultimately escaped the duties after the US struck trade deals with allies and granted exemptions to certain imports at the request of firms.

Trump ended those carve-outs in March, saying he was unhappy with the way the protections had been weakened.

At Friday’s rally at the US Steel factory, he said he wanted to make tariffs so high that US businesses would have no alternative but to buy from American suppliers.

“Nobody’s going to get around that,” he said of the 50% rate. “That means that nobody’s going to be able to steal your industry. It’s at 25% – they can get over that fence. At 50%, they can no longer get over the fence.”

As of May, imports and the rate of raw steel production in the US had changed little since last year before Trump raised tariffs, according to the American Iron and Steel Institute.

But steel imports fell 17% in April, compared to March. And businesses selling the metals into the US said they expected Trump’s latest announcement to lead to an even more dramatic drop.

Trump’s moves in March had already prompted Canada and the European Union to prepare to hit back with tariffs of their own American products.

On Tuesday, Olof Gill, spokesperson for economic security and trade for the European Commission told the BBC the two sides were engaged in intense talks to try to make progress toward an agreement.

“We’re negotiating hard to try and make good deals,” he said.

“We really hope that the Americans will roll back on this latest tariff threat, as they have done on others, but that remains to be seen.”

In the UK, Trump’s announcement put new pressure on the government to pin down the trade deal in the works with the US, which had been expected to provide some protection from the March metals tariffs.

Trade Secretary Jonathan Reynolds met with US Trade Representative Jamieson Greer in Paris on Tuesday.

His office said it was “pleased” that the trade talks had protected UK steel from the latest duties.

“We will continue to work with the US to implement our agreement, which will see the 25% US tariffs on steel removed,” he said.

Gareth Stace, director general of UK Steel, which represents steelmakers, told the BBC that his members had already seen orders cancelled and delayed as a result of the 25% tariffs put in place in March.

He warned that a 50% tariff would be “catastrophic” for UK exports to the US, about 7% of overall exports.

“The introduction of 50% tariffs immediately puts the shutters up,” he said. “Most of our orders, if not all of them, will now be cancelled.”

Economists said the US economy is also facing damage, as prices rise as a result of the new measures.

A 2020 analysis estimated that Trump’s first term tariffs created roughly 1,000 jobs in the steel industry, but cost the economy 75,000 jobs in other sectors, such as manufacturing and construction.

Erica York, vice president of federal tax policy at the Tax Foundation, said that she expected to see even more extreme job losses this time.

“Some of the strongest evidence is against tariffs on intermediate inputs like steel and aluminium, finding they are much more harmful because they increase the cost of production in the United States,” she said. “It’s just very foolish to double down on this type of tariff in particular.”

Chad Bartusek is director of supply chain management at Drill Rod & Tool Steels, a small, family-owned manufacturing business in Illinois, which brings in about 800,000 pounds of Austrian-made steel each year, at specifications he says are not produced in the US.

Mr Bartusek said he was currently waiting on three containers worth of steel rod, which would have entered the US without duties at the start of the year.

As of last week, he had expected to pay tariff costs about $72,000. Instead, he is looking at a tariff bill of almost $145,000.

“I woke up Saturday morning, looked at the news and my jaw dropped,” he said of Trump’s announcement.

Mr Bartusek said business had been steady until a few weeks ago.

But his firm raised prices earlier this year by 8% to 14% to help cover the new cost of the tariffs. Now customers have been ordering more cautiously and he has had to cut back hours for workers.

“It’s one punch after the other,” he said. “Hopefully, this settles down quickly.”