On Thursday, March 1, President Trump announced that he intends to impose a 10% tariff on aluminum imports and a 25% tariff on steel imports, placing him at odds with many fellow Republican officials. This decision came from an investigation by the Commerce Department that concluded that imported metal poses a threat to national security by chipping away at the strength of American industry. Trump has taken this conclusion further and added economic cause to his proposal, tweeting on Sunday, March 4, “We are on the losing side of almost all trade deals. Our friends and enemies have taken advantage of the U.S. for many years. Our Steel and Aluminum industries are dead. Sorry, it’s time for a change!” On Thursday, March 8, Trump signed multiple executive orders enacting the tariffs, planned to take effect on March 23.

The announcement has already alarmed Wall Street by raising the spectre of a trade war. Steel and aluminum tariffs are expected to benefit domestic steel and aluminum producers at the expense of companies that use these materials in their products. Share prices reflected this sentiment as shares of aluminum and metal manufacturers, such as U.S. Steel and Century Aluminum, saw increases of up to 7%, while shares of metal purchasing companies, such as Ford and Boeing, saw decreases of about 3%. Many Republican lawmakers have spoken out against these tariffs, stressing the importance of free trade and the tariff’s likely negative effects on American companies and consumers.

Speaker of the House Paul Ryan said, “I disagree with this action and fear its unintended consequences.” Additionally, Trump’s top economic adviser, Gary Cohn, resigned from his position on Tuesday, March 6, which he had previously threatened to do in response to these proposed steel and aluminum tariffs.

The tariffs have also strained foreign relations, prompting threats of retaliatory tariffs from countries throughout the international community. Trump has proposed potential exemptions to countries such as Mexico and Canada; however, these suggestions have only prompted more outcry from nonexempt steel exporters, which are widely expected to negatively impact American allies, such as South Korea, Japan, and Germany.

These tariffs have financial markets fearing the effects of a degraded foreign steel industry, a trade war, and the possibility of a new era of global protectionism.

Sources: New York Post, MarketWatch, CNN, NYT, Financial Times, LA Times, Department of Commerce, Twitter, ABC News, Washington Examiner

Photo Source: Wikimedia