The U.S. trade war continued Monday with President Donald Trump levying a 25% tariff on all aluminum and steel imports, effective March 12. The tariffs are expected to impact prices for Michigan consumers and importers in the automotive, construction, and manufacturing industries.
The U.S. is the world’s second-largest steel importer and receives steel and aluminum imports from more than 10 countries. The largest three sources of imports of steel are Canada, Mexico, and Brazil.
The U.S. currently imports about half of all aluminum used, primarily from Canada. It has increased importing of aluminum in recent years, with a 25% increase between 2015 and 2022.
The Trump administration levied similar tariffs during Trump’s first term as president. In March 2018, Trump placed a 25% tariff on steel and a 10% tariff on aluminum, with exemptions for countries such as Canada, Mexico, and other U.S. allies. Trump said that the 2025 tariffs will have no “exceptions or exemptions.”
"The thought that we're going to go backwards at a time when we've seen so much progress, it really makes no sense to any of us here in Canada," Windsor Mayor Drew Dilkens said.
While signing the executive order that issues the tariffs on Monday, Trump told reporters that the tax on international materials will protect U.S. manufacturing and steel and aluminum production.
"Our nation requires steel and aluminum to be made in America, not in foreign lands,” Trump said. “We need to create in order to protect our country's future resurgence of U.S. manufacturing and production, the likes of which has not been seen for many decades.”
Justin Trudeau, Prime Minister of Canada, said while at a summit in Paris Tuesday that the tariffs will harm the American and Canadian economies.
"Tariffs on Canadian steel and aluminum would be entirely unjustified," Trudeau said. "We are the [U.S.'s] closest ally. Our economies are integrated."
Mayor of Windsor Drew Dilkens spoke about the close economic relationship between the Metro Detroit area and Windsor. He said the tariffs would disrupt a historical partnership that benefits both the U.S. and Canada.
“A trade war sees casualties on all sides,” Dilkens told Michigan Public's Stateside. “So the thought that we're going to go backwards at a time when we've seen so much progress, it really makes no sense to any of us here in Canada. But it doesn't even make sense to almost every economist that opines on the issue.”
The White House stated that previous exemptions for tariffs have prevented those tariffs from being effective.
The tariffs are expected to raise prices in the short term for Michigan consumers, as products like vehicles and appliances become more expensive. American producers of steel and aluminum are also likely to boost their prices as manufacturers that previously imported the materials turn to domestic producers. Automakers in Michigan may need to increase prices or absorb the higher cost of materials elsewhere.
Michigan Democratic Representative Debbie Dingell, who serves on the U.S. House Energy and Commerce Committee, said tariffs can help give domestic producers a competitive edge in the global market, but the March start date gives companies little time to adjust.
“Across the board tariffs, without time for companies to adjust and understand what the unintended consequences are, it's going to end up hurting the American worker,” Dingell told NPR's Morning Edition on Tuesday. “It's going to disrupt supply chains and it's going to raise the cost for consumers."
Dingell said a different approach could include renegotiating the United States-Mexico-Canada Agreement, often called USMCA, which is a free trade agreement between the three countries.
Dilkens echoed Dingell’s sentiment that the tariff timeline could likely pose obstacles to industries such as construction and automotive manufacturing that rely on steel and aluminum.
“It's not like you're repatriating the steel industry or the aluminum industry tomorrow,” Dilkens said. “It'll probably take ten years by the time you figure all this out. In the meantime, everyone's going to pay more.”
Trump said he believes the tariffs will increase jobs in the American steel and aluminum industries. The Federal Reserve Board estimates that iron and steel producers in the U.S. are currently operating at about 70% capacity.
Trump attempted to impose an additional 25% tariff on all imports from Canada and Mexico earlier this month. Both countries reached an agreement with the White House to increase border security in exchange for a 30-day delay in tariffs. An additional 10% tariff on all imports from China went into effect on February 4.
