Trump fees on steel and aluminum will cost American industries dearly

The customs duties imposed by US President Donald Trump entered his country’s imports of steel and aluminum by 25% in implementation, starting at dawn yesterday, Wednesday, to take the United States an additional step towards a trade war with its main partners through the battle of steel that mobilizes many against Washington.

On February 10, Trump signed two executives, according to which customs duties imposed 25% on his country’s imports of steel and aluminum from all countries, as of March 12 “without exceptions or exemptions.” These exorbitant customs duties are likely to lead to these two minerals increasing the cost of producing almost everything in the United States, starting with drinks and foods to home and cars, threatening to raise the prices of consumer in the future.

The protection of the American steel industry has always been at the heart of the policies pursued by presidents from both democratic and Republican political parties in the United States over the past years. But no president pursued such measures that Trump adopts by imposing harsh customs duties to achieve this end. In his first term, Trump imposed 25% customs duties on steel imports and 10% on aluminum, but he granted exemptions to some commercial partners, including Brazil and South Korea.

However, the additional customs duties that entered into force yesterday extended to everyone without exceptions, while these measures are unlikely to increase local production of minerals, but will also cause harm to many American companies. The American industry imports a large share of the minerals it needs. According to data issued by the investment bank “Morgan Stanley”, US net imports constitute more than 80% of the country’s aluminum requirements, and about 17% of its steel needs, as Canada leads commercial partners in the two fields by a large difference from others.

While some heads of mineral companies express their happiness with the new customs duties imposed by Trump, many other industries express their great concern about the high costs, especially with American companies exploiting the White House restrictions on imports and raising prices. Last January, Lyon Tobalian, President of Nucor, the largest steel manufacturing company in the United States, expressed his dissatisfaction with the customs exemptions that Trump granted during his first term (2017-2021), and called for the expansion of customs duties.

Since Trump announced last February his intention to do so, the company “Nokur” has already raised the prices, as did the “US Steel” and Cleveland Cliffs, the two other large American steel industry companies. The price of aluminum has increased. Last month, Jesse Gary, the president of the company “Sensery”, the largest aluminum producing company in America, pointed out that his company expects to be Customs fees “concrete effect” on profits.

Mystery about increasing production and employment

However, the impact of this on increasing production, and the business opportunities are still less clear, according to a report by the British “Economist” magazine, on Wednesday. For years, American steel production has been around 75% of its productive capacity. The Trump administration seeks to raise this percentage to 80%. However, the production of both steel and aluminum has no change after the first round of the customs duties imposed by Trump in general, but rather in recent years.

When the Trump administration revealed the customs duties on steel and aluminum, the goal was to make the United States more self -sufficient. But in 2024, it was found that the production of the steel industry in the United States was 1% less than it was in 2017, that is, before the first round of the customs duties imposed by Trump, while the aluminum industry produced about 10% less.

Despite the announcement of the “Sensery” aluminum company to build the first first fuse in the United States in nearly half a century, which doubled the local initial production, this decision is partially attributed to a grant of $ 500 million from the Ministry of Energy last year. In this context, Bill Opelinger, president of Alcoa, an aluminum production company in February, said that customs duties will not be sufficient to lure his company to reopen its facilities in America, noting that the electricity prices are a greater obstacle. Oblinger added that it is difficult to make decisions “without knowing the duration of customs duties”, because his company is planning “for a period ranging between 20 and 40 years.”

Outside of the circle of steel and aluminum manufacturers, American manufacturers, who depend on metals in everything, suffer from uncertainty that Trump’s volatile threats generate to impose customs duties, and sustain the extent of the damage it will cause them. According to the Boston Consulting Group (BCG), the customs duties on the minerals, announced in February, will add $ 22 billion to the cost of steel and aluminum imports, and up to $ 29 billion on derivative products, from aircraft spare parts to bulldozers.

Trump fees will be a special punishment for companies that are a large part of their costs, including construction equipment. According to Barclays Bank, steel is more than ten costs in equipment such as excavators and bulldozers. Crown and Paul, two companies that manufacture aluminum cans for soft drinks and beer, will increase the cost of a 12 -ounce box by about ten, as it constitutes about two -thirds of the total cost. The American oil industry will also be affected, as about 40% of the different types of steel are imported in digging oil wells.

American industries turn into alternative inputs

Some companies will reduce customs duties by switching into alternative inputs. Coca -Cola has stated that it will likely add more invading drinks to plastic bottles. But many will not have this luxury. In a letter to Trump last month, the Institute of Al -Albal Manufacturers, a group representing boxes and suppliers, indicated that the 2018 customs fees, raised input prices, crushed the tin -brought steel manufacturers, a thin tin -plated steel plate that is usually used in canned foods. The industry has stopped nine production lines, “contrary to what is intended” from the fees. There are now only three lines. Consumers may complain close to the high prices of canned food, according to “Economist”.

An economic analysis published by the American International Trade Committee, an independent agency of the two parties, according to a report by the New York Times yesterday, indicated that the costs incurred by the American economy are from the first batch of customs duties on the minerals imposed by Trump during his first term (2017 – 2021) outperform the gains. The study concluded that the customs duties on the minerals imposed in 2018 encouraged steel and aluminum buyers to buy more American sources, and led to the high domestic prices of minerals, while American steel production increased by only about 2% between 2018 and 2021, which are the two years that the report addressed.

High costs of auto and industrial machinery companies

But the analysis also found that customs duties raised production costs for car -made companies, tools and industrial machinery, which led to the contraction of production in these and other manufacturing industries by about 3.48 billion dollars in 2021. The steel and aluminum sector produced only $ 2.25 billion of minerals in that year due to the fees.

In an attempt to alleviate these dire consequences, the Trump administration expanded its customs duties on steel and aluminum this time to include various transformational goods, or “derived products”, made of steel and aluminum, such as tractor parts, metal furniture and hinges.

This step is a “implicit recognition” of the suffering of some industries due to the previous customs duties imposed by Trump. He added that the customs duties created a “episode of successive protectionism” where more industries will require government guarantees, and that “it may be difficult to stop” once they start. “Where is this?

The possibility of high costs also encouraged other American industries, such as car manufacturers, to pressure in order to impose customs duties on their foreign competitors to protect their business. Trump has stated that he is planning to impose customs duties on foreign cars on April 2. For automotive companies, customs duties are threatened with minerals to raise costs while the prices of new cars and trucks are already approaching record levels. According to the Edmonds Market Research Group, the average price of the new car in January was more than 48 thousand dollars. “The ability to withstand costs is a great concern for American auto buyers in light of high prices and interest rates,” said Jessica Caldwell, analyzed in Edmunds.