WASHINGTON (MaceNews) – The new worldwide 25% U.S. tariffs on steel and aluminum Wednesday – with no exemptions – piled atop the now 20% levied on China goods, 22 days away from the start of the nation’s far bigger experiment in confrontational trade policy, “reciprocal tariffs.”
As expected, retaliatory tariffs also began to accumulate, first with Canada and soon from Europe and more from China. In April and for months after, there are likely many additional coming.
Already, as the Peterson Institute estimates, American households will spend about $1,000 a year more because of the latest tariffs and much more after the April 2 round takes hold.
The Wall Street Journal ran its third anti-tariff lead editorial Wednesday, concluding that while it previously dubbed the exercise the “dumbest trade war ever” that it was then just “being kind.”
Aluminum and steel producers rejoiced, with Constellium SE and Cleveland-Cliffs CEOS telling CNBC Wednesday morning how their aluminum and steel products can now better compete with China’s flood of excess profit-destroying excess capacity.
For firms using the now higher-priced aluminum and steel, however, not so much joy. For them what the Trump administration says is an effort to level the playing field in trade is placing them in a ditch. Barclays estimated that so far the price of a new vehicle will have risen about $400, with much worse price hikes to come.
President Trump Wednesday told reporters that there will be no exemptions to the April 2 round of tariffs once imposed, suggesting that negotiations are expected beforehand.
Administration officials have signaled in various ways that some “disruption,” “disturbance” or, according to Treasury Secretary Bessent, a period of “de-tox” is in store in higher prices and market volatility. It will, though, all be worth it in the unspecified long run, they say, as firms relocate in the United States, increase employment and increase manufacturing. Their intention, they say, is to shift the economy from dependence on the government to dependence on private finance.
The day’s Consumer Price Index report, showing less inflation pressure than expected in February, was somewhat irrelevant insofar as tariffs are concerned, since they are mostly a March phenomenon. The CPI result gave U.S. stocks an initial boost but was quickly overwhelmed by other factors.
Meanwhile, unintended consequences abound. Soon to be sworn in as Canada prime minister is a leader of a Liberal Party abruptly rejuvenated by the U.S. tariffs and “51st state” insults. And instead of an easily mocked politician, the prime minister will be a seasoned former central banker twice over who is intimately familiar with the key vulnerability of the U.S. economy, its unsustainable path of debt accumulation.
In China, state media reported U.S.-based retailers are being called in for a warning not to shift the cost of tariffs on to the country’s suppliers and told to lobby U.S. officials to moderate the aggressive trade stance. The warning was interpreted as a threat to impose sanctions.
For whatever reasons, generalized fear seemed to be growing that should circumstances such as a weaker economy, less immigration, higher interest rates, escalating tariff retaliation and maybe a diminution of administration political capital conspire to jeopardize the cherished Republican dream of major legislated tax benefits later this year the gigantic bet on universal tariffs and the economic war being waged on Canada and Mexico may not pay off.
Canada’s retaliatory tariffs so far, which take effect Thursday, will hit about $21 billion of U.S. imports, including about $9 billion in steel products, $2 billion in aluminum, computer and sports equipment.
The European Union retaliation begins April 1 consisting of 50% on U.S. motorcycles, whiskey and boats, cranberries and tablecloths. However the EU is imposing more tariffs beginning mid April on steel, aluminum, poultry, beef, soybeans and carpets. Together the E.U. tariffs announced so far would be on about $28 billion of U.S. products.
After the April 2 so-called reciprocal tariffs to be announced by the U.S. Commerce Department, there are likely to be additional retaliatory moves, this time from beyond the current U.S. targets. In remarks to reporters Wednesday President Trump said some of those levies might go beyond symmetry, because, he said, the U.S. has been “abused” for a long time.