President Donald Trump has reinstated the full 25% tariff on steel imports and increased the tariff on aluminum imports to 25%, citing national security concerns. The move aims to close loopholes and exemptions that have allowed foreign competitors to undermine the U.S. steel and aluminum industries.

Countering Trade Practices That Undermine National Security

On Monday, President Trump signed proclamations to eliminate alternative agreements, apply strict “melted and poured” standards, expand tariffs to include key downstream products, terminate all general approved exclusions, and crack down on tariff misclassification and duty evasion schemes.

Exemptions had previously been granted to Argentina, Australia, Brazil, Canada, Japan, Mexico, South Korea, the European Union, Ukraine, and the United Kingdom, weakening the tariffs' intended effect. These exemptions inadvertently allowed China and other countries with excess steel and aluminum capacity to exploit loopholes, undermining U.S. industries.

President Trump invoked his authority under Section 232 of the Trade Expansion Act of 1962 to adjust steel and aluminum imports in order to protect national security. In March 2018, he initially imposed a 25% tariff on steel and a 10% tariff on aluminum, measures that bolstered domestic steel production and helped prevent the collapse of the U.S. primary aluminum industry. However, loopholes and exemptions have weakened the program's effectiveness.

Restoring the Section 232 tariffs is intended to revitalize the domestic steel and aluminum sectors and achieve sustainable capacity utilization of at least 80%.

Restoring Fairness to Steel and Aluminum Markets

President Trump’s action seeks to combat unfair trade practices and global steel and aluminum dumping. Foreign nations, particularly China, have flooded the U.S. market with cheap, often government-subsidized metals.

A report from the Trump administration found that excessive steel imports were weakening the domestic economy and threatening national security. While the U.S. steel industry briefly reached 80% utilization in 2021, trade pressures following the COVID-19 pandemic caused production to decline. By 2023, utilization rates had fallen to 75.3%, with high import volumes from tariff-exempt countries being a major factor.

Aluminum capacity utilization saw a brief increase from 40% in 2017 to 61% in 2019 but has since declined to 55% in 2023. The administration warns that without stronger trade protections, the U.S. may struggle to meet demand for national defense and critical infrastructure in an emergency.

Strengthening America’s Manufacturing Industry

By closing existing tariff loopholes, President Trump aims to strengthen the U.S. steel and aluminum industries. The Section 232 tariffs implemented during his first term led to job growth, higher wages in the metals sector, and a resurgence in domestic production.

Steel and aluminum imports dropped by nearly one-third from 2016 to 2020, and more than $10 billion was invested in new U.S. mills. Hyundai Steel recently announced it is considering building a plant in the U.S. Industry groups such as the American Iron and Steel Institute and the Steel Manufacturers Association have praised the renewed trade policies.

Tariffs as an Economic and Strategic Tool

Studies suggest that tariffs can be effective in achieving economic and strategic goals. A 2024 analysis found that Trump’s tariffs strengthened the U.S. economy and spurred reshoring in manufacturing and steel production.

A 2023 U.S. International Trade Commission report found that Section 232 and 301 tariffs reduced Chinese imports while stimulating domestic production, with minimal price impacts. The Economic Policy Institute reported that Trump’s tariffs showed no clear link to inflation. An Atlantic Council analysis found that tariffs incentivized American consumers to buy domestically produced goods.

Former Treasury Secretary Janet Yellen stated last year that tariffs do not significantly impact consumer prices, and a 2024 economic analysis projected that a global 10% tariff could boost the U.S. economy by $728 billion, create 2.8 million jobs, and raise household incomes by 5.7%.

By reinstating and strengthening tariffs, the administration aims to support American manufacturing, secure national security interests, and counter unfair global trade practices.

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