Alex Brandon/AP Photo
President Donald Trump displays a signed proclamation regarding steel imports in the Oval Office of the White House, February 10, 2025, as commerce secretary nominee Howard Lutnick watches.
The Trump administration is imposing worldwide 25 percent tariffs on steel and aluminum. The tariffs affect not only direct imports, but Chinese steel and aluminum concealed in products that come in from Mexico, South Korea, and other countries.
China has massive overcapacity in steel, whose production is heavily subsidized. For years, a building boom consumed much of China’s steel production domestically. But an oversupply of housing followed by a housing market crash led China to respond by drastically cutting prices and increasing exports.
China exports some of this raw steel directly but sends a lot of it to third countries that then turn it into products that are shipped to the United States. For instance, South Korea uses cheap Chinese steel to make tubes that it then exports here. Those tubes evade existing tariffs on Chinese steel.
Mexico is the most serious offender, sending pipes, tubes, rebar, conduit, and other products made with Chinese steel to the U.S., and cooking the books in describing its origin. According to a report by the Coalition for a Prosperous America, steel product imports from Mexico—like conduit used to protect electric wires—have surged 472 percent above levels agreed upon with Washington in 2023. Mexico now accounts for more than 87 percent of U.S. steel conduit imports, undercutting American producers and forcing plant closures.
Trump’s tariff order will require more accurate accounting. And even if the books are cooked, the same 25 percent tariff will hit steel products made with Chinese steel that ostensibly originate in Mexico.
In the case of aluminum, Canada is the largest supplier to the U.S., accounting for 79 percent of total imports in the first 11 months of 2024. Unlike Chinese steel, which is sold below the cost of production, Canadian production of aluminum makes sense, since aluminum production is very energy-intensive and Canada has a lot of cheap hydropower.
The Steelworkers union, in a statement by union president David McCall, welcomed the tariffs on steel but objected to the aluminum tariffs on Canada. McCall said, “Canada is not the problem. Indeed, Canada has taken steps to coordinate their trade policies with the U.S. to respond to unfair foreign trade, and applying across-the-board tariffs ultimately hurts workers on both sides of the border.”
During his first term, Trump imposed general 25 percent tariffs on steel and 10 percent tariffs on aluminum. But he exempted South Korea, Australia, and Brazil from the tariffs in exchange for their imposing quotas limiting how much steel they would ship to the United States. Such quotas can be evaded by disguising products that use Chinese steel.
As carefully targeted industrial and trade policy, the latest steel tariffs are a vast improvement over Trump’s general pronouncements calling for across-the-board tariffs as revenue-raisers or as the U.S. against the world. Not by coincidence, Robert Lighthizer, a longtime Trump adviser on trade policy, published a long op-ed piece in Monday’s New York Times, proposing a worldwide trade regime in which nations that agreed to play by the same rules would have lower tariffs, while other nations that use aggressive mercantilist policies to run chronic trade surpluses would have higher tariffs.
Lighthizer, like Trump, has sometimes called for high universal tariffs. These targeted tariffs are much better strategy.
Unlike some of Trump’s impulsive policy pronouncements, this one was carefully considered and staffed out. The Steelworkers, who stand to gain or retain many thousands of jobs, were part of the conversation. And this policy, unlike so many others of Trump’s hollow gestures, may actually deliver something for American workers.
The same cannot be said of Trump’s abrupt announcement on Friday that Nippon Steel will be allowed to buy into U.S. Steel. Until that announcement, Trump had supported the Biden administration’s policy of blocking U.S. Steel’s proposed sale to Nippon on national-security grounds.
But the day after a Thursday meeting with U.S. Steel CEO David Burritt, Trump said at a joint press conference with Prime Minister Shigeru Ishiba of Japan at the White House that Nippon could buy a major share of U.S. Steel, but not the whole company. “They’ve agreed to invest heavily in U.S. Steel, as opposed to own it. And that sounds very exciting,” Trump said.
This announcement came as a complete surprise to all concerned, including leaders of Nippon Steel and other executives of U.S. Steel, as well as the Steelworkers union. It was not clear what Nippon might be investing in, or what its investment would buy.
“Our union has had no contact with either company or the administration regarding reports of a Nippon investment in U.S. Steel,” said McCall, of the United Steelworkers. “However, our concerns regarding Nippon’s continued interest in U.S. Steel remain unchanged.”
Nor was it clear whether Trump’s motive was to help the Japanese save face or to bail out U.S. Steel executives, who had lost a huge payday when Biden killed the deal.
Thus Donald Trump. Occasionally his brand of economic nationalism yields sensible policies. Most of the time, it is as half-baked as his other ideas.
