How Trump's aluminum and steel tariffs might hit consumers
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Trump signs an order on steel and aluminum tariffs in 2018. Photo: Andrew Harrer/Bloomberg via Getty Images
President Trump on Monday imposed blanket 25% tariffs on imports of steel and aluminum, an escalation of trade tensions with ripple effects that might be felt by American consumers.
Why it matters: The metals are critical inputs for cars, electric appliances, homebuilding materials and more. Manufacturers will face higher costs that might ultimately be passed to shoppers.
- If the tariffs move ahead, it would be the biggest escalation yet of Trump's trade policy, which some economic officials warn will result in higher consumer prices and inflation.
- Shares of U.S. steelmakers — an industry that has long pushed for restrictions on steel imports — soared on Monday after Trump previewed the tariffs.
Driving the news: Trump signed two proclamations on the new tariffs in the Oval Office on Monday.
- Trump told reporters the tariffs on steel were "the first of many."
Between the lines: Shoppers do not necessarily buy steel and aluminum in bulk, but the metals are crucial components of most things one might encounter: pots, foil, golf clubs, furniture and more.
- The materials are also important inputs for smartphones, airplane parts, cars, infrastructure projects and the oil-and-gas industry.
By the numbers: Prices paid for steel and aluminum could rise as much as 20% in the months after tariffs are implemented, before falling back some, according to research firm Pantheon Macroeconomics.
- The economists estimate that a prolonged jump in prices — if they are passed fully onto consumers — would cost consumers an extra $8 billion per year.
Flashback: The tariffs restart a fight first ignited in 2018, when the Trump-era Commerce Department initially imposed import taxes on steel and aluminum. In that case, some industries and countries — including Canada and Mexico — won exemptions.
- Demand for domestic steel and aluminum makers surged, though that came at the expense of industries that rely most on the materials for production.
- There was "reduced production" in downstream industries that use steel and aluminum products as inputs because of increased prices, according to a report by the U.S. International Trade Commission, an independent federal agency.
Yes, but: These tariffs are more far-reaching than in 2018.
- Those were applied to raw materials; now the sweeping order includes imported aluminum and steel-based inputs critical to the auto industry, Bloomberg reported.
What to watch: Potentially most impacted are auto parts suppliers, where profit margins are razor-thin and any tariffs are likely to be passed up through the supply chain and eventually to consumers.
- With an average of 2,500-3,000 pounds of steel and aluminum in a vehicle, a 25% tariff would add about $400 to $500 to the price of a $48,000 car, RashinderPal Gill, a partner and managing director at Alix Partners, tells Axios.
Axios' Joann Muller contributed reporting.
Editor's Note: This story has been updated with comment from President Trump, details of his signing of the proclamations and background on the impact of the tariffs.
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