How the Steel and Aluminum Tariffs Are Hurting U.S. Manufacturing   

The administration imposed 25% tariffs on imports of steel and aluminum from all countries on March 12, increasing costs for U.S. manufacturers and putting them at a disadvantage to their global competitors. Ultimately, these tariffs will lead to higher costs for American businesses and consumers and fewer exports for American companies. 

What to Know:  

First, the rebooted tariffs are much more extensive than those imposed in 2018.  

• Countries such as Canada and Mexico had been dropped from the list of countries subject to the steel and aluminum tariffs, and others had negotiated quotas that allowed some of the metals to enter the U.S. market duty-free. Now, however, the tariffs apply to all countries and all imports. 

• The new steel and aluminum tariffs are also being applied to a wide range of “derivative” products—that is, products from bulldozer blades and ladders to auto and airplane parts that are made out of steel or aluminum.  

Second, unlike 2018, there is no exemption process for metals that are not available domestically in adequate quantities.  

• Steel and aluminum, after all, come in a wide variety of highly-specialized forms, and some of these are either not available from domestic manufacturers or are produced in insufficient quantities in the United States. 

• Under the 2018 tariffs, U.S. companies could apply for exemptions to the tariffs for products not readily available except by import. 

• From July 2019 until leaving office, the first Trump administration approved over 109,000 exemptions from their own steel and aluminum tariffs (Note: this data is drawn from those exemptions published on the Department of Commerce’s 232 Exclusions Portal and does not include exclusion requests filed before June 13, 2019; therefore undercounting the total number of exemptions granted). 

Frequently requested and granted exclusions include products like: 

• Tinplate for canning vegetables; 

• Tubular goods used in oil and gas production and to make heaters and radiators;  

• Rectangular alloys used in the making of products such as heat exchangers; and 

• Gear blanks and cutting edges for heavy equipment. 

The Impact: 

Tariffs on manufacturing inputs that are not domestically available are especially problematic for American manufacturers. 

• When a product is not otherwise readily available except by import, the manufacturer has little recourse but to pay the tariff. This immediately increases the cost of making goods here in America. 

Tariffs are raising prices for steel and aluminum overall which will contribute to higher prices for manufacturers and raise the cost of living for consumers. 

• U.S. steel benchmarks are now roughly twice world prices. Aluminum prices are also up sharply as more than half of U.S. demand is met by imports, most of which come from Canada. 

• Prices hikes for industrial inputs like steel and aluminum hurt a broad swath of downstream manufacturers across the United States, from the auto and aerospace sectors to food producers and the oil and gas sector. For every job in steel production, there are roughly 80 Americans employed by manufacturers that use steel as an input, and the ratio of upstream-to-downstream employment in aluminum is 1-to-177. 

Retaliation for U.S. tariffs is hurting exports for American manufacturers. 

• Canada, the largest supplier of steel to the United States, has already imposed retaliatory duties on about $20 billion of U.S. exports of “tools, computers and servers, display monitors, sports equipment, and cast-iron products,” according to reporting by the AP. The EU’s retaliation—to be launched in April—will target about $28 billion of U.S. exports of beef, poultry, motorcycles, bourbon, peanut butter, and jeans. 

• For sectors targeted with retaliatory duties, the pain is substantial. For example, U.S. spirits exports to Europe slumped by about 40% after the EU imposed retaliatory duties in response to U.S. metals tariffs during the first Trump administration. The U.S. spirits sector, which benefits hugely from exports, employs about 1.7 million American workers, according to a report by the Distilled Spirits Council of the United States. 

About the authors

John G. Murphy

John Murphy directs the U.S. Chamber’s advocacy relating to international trade and investment policy and regularly represents the Chamber before Congress, the administration, foreign governments, and the World Trade Organization.

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