When announcing the agreement allowing Nippon Steel to acquire U.S. Steel on May 30, President Trump promised to double to 50% U.S. tariff rates on steel and aluminum. On June 3 he signed a proclamation implementing those tariffs and also applying them to the steel and aluminum content in derivative products.
While it is hard to imagine that such draconian tariffs on two essential imports could be sustained—and negotiations apparently are under way to grant Mexico a partial waiver—it is the most reckless trade action of the Trump presidency.
Because steel and aluminum are crucial in manufacturing, anything close to a 50% tariff will drive up the cost of U.S. manufactured products dramatically. That will harm consumers, make U.S. manufactured products far less competitive on the world market, and significantly increase the probability that tariffs will drag the economy into a recession. By making reciprocal trade agreements more difficult to negotiate, Mr. Trump’s steel and aluminum tariffs will increase the probability of retaliation against American exports and an all-out trade war.