Trump’s steel and aluminium tariffs target a deeper issue – but risk job losses and higher prices

Published

7 months ago

February 10, 2025

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Few materials matter quite as much as steel and aluminium.

Steel, an alloy of iron and carbon, is the main metallic ingredient in the structures we live in and the bridges we build. If it’s not made of steel it’s made with steel.

Aluminium, on the other hand, is a wonder material we use with wild abandon these days. A light metal we use in planes and trains, in the bodies of electric vehicles and in those high voltage power lines we’ll need so many of to provide electricity in the coming years.

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All of which is to say these metals are the bedrock for much of the world around us. And like most developed economies, the US is far from independent when it comes to these materials. The degree of dependence on other countries varies between them.

According to the US Geological Survey, America’s “net import reliance ratio” for aluminium is close to 50%, implying it is deeply dependent on imports to satisfy demand among its companies. The degree of dependence is considerably lower for steel – only a little over 10%.

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.

There’s a deeper issue here, which comes back (as so many of Mr Trump’s economic measures do) to China. Both the steel and aluminium markets have faced enormous influxes of cheap Chinese metals in recent years – to the extent that in recent months those Chinese imports have actually been cheaper than the cost of production in Europe.

To some extent, that’s a consequence of high European energy costs, but it’s partly down to the fact that China subsidises its producers more than most other countries around the world. Indeed, of all the products in the world, few have had as many cases lodged at the World Trade Organisation as steel.

But while it’s worth being aware of these dynamics, which are pushing cheap steel into many markets, it’s also worth noting that the US actually imports far less from China than you might have thought. The vast majority of American aluminium imports, for instance, come from Canada rather than China. Any tariffs on the metal would further undermine the economic relationship between these parts of North America.

Much, of course, now depends on the structure and detail of these tariffs – and the extent to which they’re actually implemented. As with his threatened tariffs on Canada and Mexico, these ones raise as many questions as they answer. That is likely to be the way of things for much of this presidential term.

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Nvidia beats revenue expectations in boost to AI investment and US stock markets

Published

7 hours ago

August 28, 2025

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Nvidia beats revenue expectations in boost to AI investment and US stock markets

The world’s most valuable company, and first to be valued at $4trn (£2.9trn), beat market expectations in keenly anticipated financial results.

Microchip maker Nvidia recorded revenues of $46.7bn (£34.6bn) in just three months up to July, latest financial data from the company showed, slightly better than Wall Street observers had expected.

The company’s performance is seen as a bellwether for artificial intelligence (AI) demand, with investors paying close attention to see whether the hype is overblown or if significant investment will pay off.

Originally a creator of gaming graphics hardware, Nvidia’s chips help power AI capability – and the UK’s most powerful supercomputer.

Nvidia’s graphics processors underpin products such as ChatGPT from OpenAI and Gemini from Google.

Other tech giants – Microsoft, Meta and Amazon – make up Nvidia’s biggest customers and are paying large sums to embed AI into their products.

Why does it matter?

Nvidia has been central to the boom in AI development and the surge in tech stock valuations, which has seen stock markets reach record highs.

It represents about 8% of the value of the US S&P 500 stock market index of companies relied on to be stable and profitable.

Strong results will continue to fuel record highs in the market. Conversely, results that fail to live up to the hype could trigger a market tumble.

Nvidia itself saw its share price rise more than 40% over the past year. Its value impacts anyone with cash in the US stock market, such as pension funds.

The S&P 500 rose 14% over the past year, and the tech-company-heavy NASDAQ gained 21%, largely thanks to Nvidia.

As such, its earnings can move markets as much as major economic or monetary policy announcements, like an interest rate decision.

What next?

Revenue rises are forecast to continue to rise as Nvidia said it expected a rise to roughly $54bn (£40bn) in the next three months, more than the $53.14bn (£39.3bn) anticipated by analysts.

This excludes any potential shipments to China as export of Nvidia’s H20 chip, designed with the Biden administration’s export crackdown on advanced AI powering chips in mind, had been banned under US national security grounds.

But in recent weeks, Nvidia and another chipmaker, AMD, reached an unprecedented agreement to pay the Trump administration a 15% portion of China sales in return for export licences to send chips to China.

There were no H20 sales at all to China in the second quarter of the year, the period for which results were released on Wednesday evening.

Previously, 13% of Nvidia’s revenue came from China, with nearly 50% coming from the US.

Market reaction

Despite the expectation-beating results, Nvidia shares were down in after-hours trading, as the massive revenue rises previously booked by the company were not repeated in the latest quarter.

Compared to a year ago, revenues rose 56% and 6% compared to the three months up to April.

The absence of Chinese sales in forecasts appeared to disappoint.

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Bonuses to rise for Ryanair staff spotting oversized baggage

Published

10 hours ago

August 27, 2025

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Bonuses to rise for Ryanair staff spotting oversized baggage

Ryanair staff are to get more money for spotting and charging for oversized baggage, the company’s chief executive has said.

Michael O’Leary said he made “absolutely no apology” for catching people who are “scamming the system”.

The reward for intercepting passengers travelling with bags larger than permitted will increase from €1.50 (£1.29) to €2.50 (£2.15) per bag in November, and the monthly €80 (£68.95) payment cap will be scrapped, Mr O’Leary said.

At present, the budget airline allows travellers a free 40cm x 30cm x 20cm bag, which can fit under the seat in front, and charges for further luggage up to 55cm x 40cm x 20cm in size.

Customers face fines of up to £75 for an oversized item if it is brought to the boarding gate.

“I make absolutely no apology for it whatsoever”, Mr O’Leary said.

“I am still mystified by the number of people with rucksacks who still think they’re going to get through the gate and we won’t notice the rucksack”, he added.

Around 200,000 passengers per year are charged bag fees at airport gates.

“We have more work to do to get rid of them”, Mr O’Leary said.

“We are running a very efficient, very affordable, very low-cost airline, and we’re not letting anybody get in the way.”

The airline does not support a European Union proposal to ensure customers get a free cabin bag, he said.

Air fares

After a 7% fall in air fares for the year to 31 March, Mr O’Leary said he expected ticket prices to go back up this financial year.

“We expect to get most of last year’s 7% decline, but not all,” he told reporters in a news conference.

“We have sold about 70% of our September seats, but we have another 30% to sell, and it’s those last fares, what people pay for all those last-minute bookings through the remainder of September, that will ultimately determine what average airfares are.”

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Energy price cap: Government costs to raise bills from October

Published

22 hours ago

August 27, 2025

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Energy price cap: Government costs to raise bills from October

A larger than expected hike in the energy price cap from October is largely down to higher costs being imposed by the government.

The typical sum households face paying for gas and electricity when using direct debit is to rise by 2% – or £2.93 per month – to £1,755, the energy watchdog Ofgem announced.

The current price cap is £1,720 a year. A 1% increase had been widely forecast.

The latest bill settlement, covering the final quarter of the year until the next price review takes effect from January, will affect around 20 million households.

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There are 14 million others, such as those on pre-payment meters, who will also see bills rise by a similar level.

Those on fixed deals, which are immune from price cap shifts until such time as the term ends, currently stands at 20 million.

Wholesale prices – volatile since Russia’s invasion of Ukraine back in February 2022 – have been the main driver of rising bills.

But they are making little contribution to the looming increase.

Ofgem explained that government measures, such as the expansion of the warm home discount announced in June, were mainly responsible.

The discount is set to add £15 to the average annual bill.

It will provide £150 in support to 2.7 million extra people this year, bringing the total number of beneficiaries to six million.

The balance is made up from money needed to upgrade the power network.

Tim Jarvis, director general of markets at Ofgem, said: “While there is still more to do, we are seeing signs of a healthier market. There are more people on fixed tariffs saving themselves money, switching is rising as options for consumers increase, and we’ve seen increases in customer satisfaction, alongside a reduction in complaints.

“While today’s change is below inflation, we know customers might not be feeling it in their pockets. There are things you can do though – consider a fixed tariff as this could save more than £200 against the new cap. Paying by direct debit or smart pay as you go could also save you money.

“In the longer term, we will continue to see fluctuations in our energy prices until we are insulated from volatile international gas markets. That’s why we continue to work with government and the sector to diversify our energy mix to reduce the reliance on markets we do not control.”

The looming price cap lift will leave bills around the same sort of level they were in October last year but it will take hold at a time when overall inflation is higher.

Food price increases, also partly blamed on government measures such as the national insurance contributions hike imposed on employers, have led the main consumer prices index to a current level of 3.8%.

It is predicted to rise to at least 4% in the coming months, further squeezing household budgets.

Ministers argue that efforts to make the UK less reliant on natural gas, through investment in renewable power sources, will help bring down bills in future.

Energy minister Michael Shanks said: “We know that any price rise is a concern for families. Wholesale gas prices remain 75% above their levels before Russia invaded Ukraine. That is the fossil fuel penalty being paid by families, businesses and our economy.

“That is why the only answer for Britain is this government’s mission to get us off the rollercoaster of fossil fuel prices and onto clean, homegrown power we control, to bring down bills for good.

“At the same time, we are determined to take urgent action to support vulnerable families this winter. That includes expanding the £150 Warm Home Discount to 2.7 million more households and stepping up our overhaul of the energy system to increase protections for customers.”