US president Donald Trump last night announced to the world that import tariffs on steel and aluminium would be hiked as part of his stated ambition of reviving the country’s raw materials processing sectors.
The president, citing reasons of national security, said import duties on steel would be increased to 25% while aluminium would incur import tariffs of 10%.
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He reportedly told more than a dozen executives he wanted the tariffs to apply to all countries. Trump argued if one country was exempt, all other countries would line up to ask for similar treatment, and that metals could end up being shipped to the US through exempted countries.
Both materials are used extensively in the automotive, construction and aerospace industries.
The announcement sent global stock markets into reverse, including the Dow Jones Industrial average which fell by 420 points after the announcement. Shares in automakers and steel companies in Asia and elsewhere plunged on fears that input costs will rise and consumer prices will have to be raised.
Toyota, which sold 2.4m vehicles in the US last year, said it may have to raise prices in the US in response to the announcement – despite stating that 90% of the steel it buys in the US is sourced locally. Its shares fell by almost 3% in Tokyo in morning trade on Friday (2 March).
Others automakers also saw sharp declines in their share prices after the announcement including General Motors which saw a 4% drop while Ford, FCA and Honda shares fell by close to 3%.
The president’s announcement sparked fears of a looming trade war with the US’ main trading partners expected to retaliate if affected.
The president of the European Commission, Jean-Claude Juncker, said the European Union would “react firmly and commensurately” to defend its interests.
Canada’s foreign affairs minister Chrystia Freeland said there were no issues with national security and these trade restrictions would hurt workers and manufacturers on both sides of the border.
The Chinese government has yet to announce any countermeasures but is expected to react in its own time.
