Trump imposes 25% tariffs on all steel and aluminium imports
Donald Trump has signed two proclamations imposing 25% tariffs on all steel and aluminium imports to the US.
A proclamation is a form of presidential directive to government officials, but they do not carry the force of law, as an executive order would.
However the White House has said the tariffs will take effect from 4 March.
“This is a big deal,” Mr Trump said in the Oval Office as he announced the tariffs. “The beginning of making America rich again.”
He added: “We were being pummelled by both friend and foe alike.”
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‘We were being pummelled by both friend and foe alike,’ said the US president
The proclamations mean the president has now removed the exceptions and exemptions from his 2018 tariffs on steel to allow for all imports of the metal to be taxed at 25%.
The new tariff on aluminium is also much higher than the 10% duty he imposed on the material in his first term.
The tariffs are part of an aggressive push by Mr Trump to reset global trade, as he claims that price hikes on the people and companies buying foreign-made products will ultimately strengthen domestic manufacturing.
Outside economic analyses suggest the tariffs would increase costs for the factories that use steel and aluminium, possibly leaving US manufacturers worse off.
Canada, the largest source of steel imports to the US, criticised the move.
Candace Laing, CEO of the Canadian Chamber of Commerce, said Mr Trump was destabilising the global economy.
“Today’s news makes it clear that perpetual uncertainty is here to stay,” she said.
Hard to see how tariffs won’t be inflationary
At least part of the idea behind tariffs is to bring some production back to the US, but imposing them will have consequences.
What kinds of consequences? Well, at its simplest, tariffs push up prices. This is, when you think about it, blindingly obvious.
A tariff is a tax on a good entering the country.
So if aluminium and steel are going up in price then that means, all else equal, that the cost of making everything from aircraft wings to steel rivets also goes up.
That in turn means consumers end up paying the price – and if a company can’t make ends meet in the face of these tariffs, it means job losses – possibly within the very industrial sectors the president wants to protect.
So says the economic theory. But in practice, economics isn’t everything.
There are countless examples throughout history of countries defying economic logic in search of other goals.
Perhaps they want to improve their national self-reliance in a given product; perhaps they want to ensure certain jobs in cherished areas or industries are protected.
But nothing comes for free, and even if Donald Trump’s tariffs succeed in persuading domestic producers to smelt more aluminium or steel, such things don’t happen overnight.
In the short run, it’s hard to see how these tariffs wouldn’t be significantly inflationary.
Trump’s war of tariffs
Mr Trump’s proclamations come days after the US imposed a 10% tariff on all goods imported from China.
In return, China imposed 10% tariffs on American crude oil, agricultural machinery, large-displacement cars and pickup trucks.
There will also be 15% tariffs on coal and liquefied natural gas from the US.
US plans to impose 25% tariffs on Mexico and Canada were paused after agreements were reached on border security.
Mexico’s president said she was sending 10,000 National Guard troops to the US border immediately in return for a tariff delay.
Mr Trump said the Mexican soldiers would be “specifically designated” to stop the flow of fentanyl into the US, as well as illegal migrants.
Meanwhile, Canada’s prime minister Justin Trudeau said almost 10,000 frontline personnel “are and will be working on protecting the border”.
He added that his country was appointing a “fentanyl czar”, drug cartels would be listed as terrorists, and there would be “24/7 eyes on the border”.
Rachel Reeves has been urged by a think tank to cut national insurance and increase income tax to create a “level playing field” and protect workers’ pay.
The Resolution Foundation said the chancellor should send a “decisive signal” that she will make “tough decisions” on tax.
Ms Reeves is expected to outline significant tax rises in the upcoming budget in November.
The Resolution Foundation has suggested these changes should include a 2p cut to national insurance as well as a 2p rise in income tax, which Adam Corlett, its principal economist, said “should form part of wider efforts to level the playing field on tax”.
The think tank, which used to be headed by Torsten Bell, a Labour MP who is now a key aide to Ms Reeves and a pensions minister, said the move would help to address “unfairness” in the tax system.
As more people pay income tax than national insurance, including pensioners and landlords, the think tank estimates the switch would go some way in raising the £20bn in tax it thinks would be needed by 2029/2030 to offset increased borrowing costs, flat growth and new spending commitments. Other estimates go as high as £51bn.
Torsten Bell appearing on Sky News
‘Significant tax rises needed’
Another proposal by the think tank would see a gradual lowering of the threshold at which businesses pay VAT from £90,000 to £30,000, as this would help “promote fair competition” and raise £2bn by the end of the decade.
The Resolution Foundation also recommends increasing the tax on dividends, addressing a “worrying” growth in unpaid corporation tax from small businesses, applying a carbon charge to long-haul flights and shipping, and expanding taxation of sugar and salt.
“Policy U-turns, higher borrowing costs and lower productivity growth mean that the chancellor will need to act to avoid borrowing costs rising even further this autumn,” Mr Corlett said.
“Significant tax rises will be needed for the chancellor to send a clear signal that the UK’s public finances are under control.”
He added that while any tax rises are “likely to be painful”, Ms Reeves should do “all she can to avoid loading further pain onto workers’ pay packets”.
The government has repeatedly insisted it will keep its manifesto promise not to raise income tax, national insurance or VAT.
A Treasury spokesperson said in response to the think tank report it does “not comment on speculation around future changes to tax policy”.
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Chancellor urged to freeze alcohol duty
Meanwhile, Ms Reeves has been urged to freeze alcohol duty in the upcoming budget and not increase the rate of excise tax on alcohol until the end of the current parliament.
The Scotch Whisky Association (SWA), UK Spirits Alliance, Welsh Whisky Association, English Whisky Guild and Drinks Ireland said in an open letter that the current regime was “unfair” and has put a “strain” on members who are “struggling”.
The bodies are also urging Ms Reeves “to ensure there will be no further widening of the tax differential between spirits and other alcohol categories”.
A Treasury spokesperson said there will be no export duty, lower licensing fees, reduced tariffs, and a cap on corporation tax to make it easier for British distilleries to thrive.
Leave retailers alone, Reeves told
This comes as the British Retail Consortium (BRC) warned that food inflation will rise and remain above 5% into next year if the retail industry is hit by further tax rises in the November budget.
The BRC voiced concerns that around 4,000 large shops could experience a rise in their business rates if they are included in the government’s new surtax for properties with a rateable value – an estimation of how much it would cost to rent a property for a year – over £500,000, and this could lead to price rises for consumers.
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Latest ONS figures put food inflation at 4.9%, the highest level since 2022/2023.
The Bank of England left the interest rate unchanged last week amid fears that rising food prices were putting mounting pressure on headline inflation.
“The biggest risk to food prices would be to include large shops – including supermarkets – in the new surtax on large properties,” BRC chief executive Helen Dickinson said.
She added: “Removing all shops from the surtax can be done without any cost to the taxpayer, and would demonstrate the chancellor’s commitment to bring down inflation.”
Donald Trump has revealed that media mogul Rupert Murdoch and his son Lachlan could be part of a deal in which TikTok in the United States will come under American control.
The US president also namedropped Michael Dell, the founder and CEO of Dell Technologies, as a possible participant in the deal during an interview with Fox News, which is owned by the Murdochs.
“I think they’re going to be in the group. A couple of others. Really great people, very prominent people,” Mr Trump said. “And they’re also American patriots, you know, they love this country. I think they’re going to do a really good job.”
Mr Trump said that Larry Ellison, founder and CEO of software firm Oracle, was part of the same group. His involvement in the potential TikTok deal had previously been revealed.
President Donald Trump speaking to reporters outside the White House. Pic: AP/Mark Schiefelbein
White House press secretary Karoline Leavitt said on Saturday that Oracle would be responsible for the app’s data and security, with Americans set to control six of the seven seats for a planned TikTok board.
This comes after Mr Trump said he and China’s Xi Jinping held a “very productive call” on Friday, discussing the final approval for the TikTok deal, much of which is still unknown.
Once confirmed, the deal should stop TikTok from being banned in the US after lawmakers decided it posed a security risk to citizens’ data.
Officials warned that the algorithm TikTok uses is vulnerable to manipulation by Chinese authorities, who can use it to push specific content on the social media platform in a way that is difficult to detect.
Congress had ordered the app shut down for American users by January 2025 if its Chinese owner ByteDance didn’t sell its assets in the country – but the ban has been delayed four times by President Trump.
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Mr Trump said on Sunday that he might be “a little prejudiced” about TikTok, after telling reporters on Friday: “I wasn’t a fan of TikTok and then I got to use it and then I became a fan and it helped me win an election in a landslide.”
After the call with Mr Xi, Mr Trump said in a Truth Social post: “We made progress on many very important issues, including Trade, Fentanyl, the need to bring the War between Russia and Ukraine to an end, and the approval of the TikTok Deal.”
Mr Trump later told reporters at the White House that Xi had approved the deal, but said it still needed to be signed.
Representatives for the Murdochs, Mr Dell and Mr Ellison have not yet commented on a potential TikTok deal.
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