Trump to increase steel and aluminum tariffs to 50%

President Donald Trump recently made an impactful decision to double the tariffs on steel and aluminum imports in the United States. The rates are set to increase from 25% to 50%, slated to go into effect on June 4th. Trump made this announcement at the Mon Valley Works Irvin Plant in West Mifflin, Pennsylvania. The primary aim of this tariff hike is to boost the domestic steel industry and facilitate a proposed merger between US Steel and Japan’s Nippon Steel.

During his speech, Trump emphasized that this move was crucial to secure the steel industry, expressing that foreign competitors would now face a substantial 50% tariff barrier. He linked this decision directly to national security, stating that without a robust steel industry, a country would be significantly weakened. Notably, this announcement comes parallel to Trump’s shift regarding Nippon’s takeover bid of US Steel. Initially met with resistance from both Trump and his predecessor, Joe Biden, the acquisition is now being rebranded as a strategic “partnership” intended to maintain American control.

Pennsylvania Senator Dave McCormick revealed that the US government would possess a “golden share,” granting it veto power over specific board appointments. This measure aims to ensure that US Steel retains an American CEO and majority-American board members while keeping its headquarters in Pittsburgh. Trump promised minimal staff reductions and pledged that all blast furnaces would run at full capacity for at least ten years.

While US Steel has labelled this agreement as a “merger” and indicated it would become a wholly owned subsidiary of Nippon Steel North America, concerns remain. The United Steelworkers union remains cautious, expressing skepticism over Nippon’s true intentions and the potential impact on existing union agreements. Additionally, Australia’s Trade Minister, Don Farrell, criticized the tariffs as unjustified and potentially damaging to global trade dynamics, particularly concerning Australian exports.

Following a tumultuous week in trade policy, which saw legal challenges to Trump’s tariffs being initially blocked and then reinstated, Trump accused China of violating a tariff truce, hinting at further trade actions against the country. Despite these complications, steel shares surged post-announcement, with companies like Cleveland-Cliffs, Nucor, and Steel Dynamics witnessing significant gains.

While the ceremony was marked by celebratory gestures like gifting Trump a Pittsburgh Steelers jersey and a golden hard hat, key specifics of the deal, such as the level of US control and final approval by the Committee on Foreign Investment in the United States (CFIUS), remain ambiguous. Nonetheless, Trump’s tariff decision underscores his administration’s commitment to fortify American industries and address concerns over national security and trade imbalances.