Trump Doubles Tariffs on Steel and Aluminum Imports

Trump's Tariff Strategy

Since Donald Trump assumed the presidency for a second term, tariffs have become a central theme in his administration. Whether he's awake or asleep, the concept of tariffs seems to dominate his discussions. From proposing to make Canada the 51st state to addressing fentanyl trafficking, Trump has consistently turned to tariffs as a solution. Observers have noted that tariffs have become his go-to strategy for various issues.

In the event of a crisis, one might wonder if Trump would resort to imposing tariffs. He has even earned the nickname 'Tariff Man,' a title he seems to embody fully. Recently, he has introduced a new weapon in the ongoing global trade war by announcing that starting June 4, tariffs on steel and aluminum imports will be increased to 50%.

Doubling Tariffs on Steel and Aluminum

On Friday, President Trump declared that the tariffs on imported steel and aluminum would be doubled, raising them from 25% to 50%. He believes this new regulation will bolster American aluminum production. This move is aimed at protecting domestic industries and promoting self-reliance. While addressing workers at a U.S. Steel plant in Pennsylvania, Trump stated that the tariff on steel would now be 50%, emphasizing that no one would escape its impact. He later confirmed on social media that the same rate would apply to aluminum, effective from Wednesday, June 4.

This decision is viewed as part of Trump's aggressive trade policy, which affects not only competitors but also allied nations. Although a court recently questioned these tariffs, a federal appeals court has allowed them to remain in effect. During his speech, Trump referenced a proposed partnership between U.S. Steel and Nippon Steel, clarifying that control would remain with U.S. Steel, ensuring no layoffs or job relocations abroad.

Impact on Indian Steel and Aluminum Exports

Regarding India, the direct export of steel and aluminum to the U.S. is relatively low. Therefore, the immediate trade impact of Trump's decision on India may be limited, but indirect effects cannot be ruled out. Experts suggest that exporters of value-added steel products and auto parts could be significantly affected. The 50% tariff could directly impact India's $4.56 billion steel and aluminum exports. According to the Global Trade Research Initiative (GTRI), this could harm the competitiveness of Indian producers. The Federation of Indian Export Organizations (FIEO) has urged the government to address this issue at a bilateral level to prevent undue harm to Indian exporters.

Consequences for Exporters and Importers

Additionally, Ajay Sahai, the Director General and CEO of FIEO, described this development as highly concerning, warning that both Indian exporters and U.S. importers would suffer significant losses. However, the implications of these tariffs extend beyond just the economy.

This situation complicates ongoing negotiations for a bilateral trade agreement between India and the U.S. Pankaj Chadha from EEPC India remarked to a media outlet that it is unfortunate that such unilateral tariff increases are occurring while discussions for a Bilateral Trade Agreement (BTA) are still in progress. This complicates the work of negotiators and is likely to adversely affect engineering exports, which currently amount to approximately $5 billion.