The United States has doubled tariffs on imported steel and aluminum, pushing rates to 50%. While aimed at protecting national security and reviving domestic production, these moves are adding new cost pressures for American manufacturers—and, ultimately, for consumers.
A Return to High Tariffs
President Trump reimposed and expanded Section 232 tariffs to address what he calls unfair foreign competition and national security risks. Originally set at 25% for steel and 10% for aluminum in 2018, these rates were doubled in June 2025. The administration has justified these increases as a way to:
- Close loopholes and exemptions that had let certain countries bypass the original tariffs
- Crack down on transshipment and duty evasion
- Force capacity utilization in U.S. mills to sustainable levels of at least 80%
Tariffs now also cover many downstream products, such as home appliances like refrigerators, dishwashers, and washing machines, applying a 50% rate to the steel content in these imports.
The Cost to Manufacturers
While tariffs may protect U.S. steel producers, they impose clear costs on American manufacturers:
- Steel-using industries include automotive, aerospace, construction, oil and gas, and appliances.
- About 12 million Americans work in steel-using sectors. In many of these industries, steel inputs account for at least 5% of production costs.
- Higher input costs often can’t be fully passed to customers, leading to lower profit margins, potential job losses, or both.
For example, a 50% tariff on steel pipes and tubes—critical for oil drilling—directly raises costs for U.S. energy producers. Domestic construction companies, auto makers, and machinery producers all report price pressures that ripple through the economy.
Inflationary Pressure
Economic studies have found that past tariffs had mixed effects on prices:
- When tariffs first hit in 2018, steel and aluminum prices rose about 2% while imports fell roughly 25%.
- Research estimates the 2018 tariffs led to the loss of 75,000 manufacturing jobs, even while they added jobs in the steel sector itself.
- Costs were passed on to consumers, as with washing machines, where tariffs raised retail prices even for models not directly covered, like dryers bought as matching sets.
Bloomberg Economics predicts the new 50% tariffs could raise U.S. consumer prices by 0.1% over three years. While this seems small, it lands atop existing inflation, adding new pressure at a time of already high interest rates.
Broader Trade Impacts
The tariffs are justified under Section 232 of the Trade Expansion Act of 1962, which allows restrictions to protect national security. The Trump administration argues that foreign subsidized metals, especially from China, have flooded global markets and threaten U.S. production.
Yet actual U.S. imports from China are small:
- China’s share of U.S. steel imports has fallen to about 2–3% in recent years.
- Canada, Mexico, South Korea, and Brazil remain major sources.
- Much of the U.S. aluminum supply—over 40%—still comes from imports, with Canada a leading supplier.
Foreign suppliers, including allies, have been angered by these moves, leading to retaliatory tariffs and trade disputes. The European Union has threatened counter-tariffs on American products, from soybeans to motorcycles.
Appliance Tariffs: A New Front
One of the most controversial expansions is to consumer goods:
- Starting June 23, 2025, steel derivative products like appliances will face the 50% tariff rate.
- This includes washing machines, refrigerators, dishwashers, stoves, and dryers.
While designed to protect U.S. appliance makers, these tariffs risk raising costs for American households. Manufacturers that rely on imported steel parts will see costs rise, making U.S.-made goods less competitive even domestically if they can’t pass costs to consumers.
Debating Effectiveness
Supporters argue tariffs have achieved goals:
- Domestic steel production did see investment surges post-2018, with over $10 billion committed to new mills.
- Utilization rates briefly hit 80% in 2021.
But critics note:
- Capacity utilization has since fallen below targets (around 75% in 2023).
- Domestic production remains vulnerable to cyclical demand.
- Higher steel prices raise costs economy-wide, impacting everything from vehicles to energy projects
