Steel tariffs doubling today poses a challenge for a North Carolina manufacturing company, questioning its ability to contend in an increasingly expensive market.

Steel and Aluminum Tariffs: A New Trade WarFront

President Trump is ratcheting up the heat on imported metal tariffs. Starting today, the tax on imported steel and aluminum will surge to an eye-popping 50%, more than doubling yesterday's rate.

The Commander-in-Chief announced this latest trade war broadside last Friday, during a visit to a US Steel plant near Pittsburgh. Trump addressed a crowd of hard-hat-wearing steelworkers, promising that this hefty tax would keep cheap, foreign steel at bay in the U.S. market.

"This will only further fortify the steel industry in the U.S.," Trump declared emphatically. "Nobody's gonna get around it."

Steelworkers vs Steel Users

While domestic steel and aluminum companies may rejoice at this hike, many people employed by companies that use these materials could see their costs skyrocket. For every steelworker in America, there are approximately 80 people working in industries that use steel, and their expenses are about to balloon.

"How can we afford to buy the most expensive steel in the world and compete with global competitors who have access to fair market prices?" wonders H.O. Woltz, who runs a reinforcement cable company in Mount Airy, North Carolina, made from twisted steel wire. During the previous Trump administration, Woltz's company felt the squeeze from paying more for raw steel and undercut competition from abroad, not burdened by tariffs.

This time around, the Trump administration is targeting not just the raw materials but also finished products—a move likely to sting companies like Woltz's, as well as the overall economy.

A Chain Reaction

The ripple effects of these tariffs touch many industries, including automotive, machinery, equipment, and construction. A study by Katheryn Russ, an economist at the University of California, Davis, revealed that increased steel and aluminum costs during the first Trump administration caused the loss of tens of thousands of downstream manufacturing jobs[2].

"Tariffs on steel can inflate costs for companies that use steel as an input to produce other goods," Russ warns. "This can discourage hiring and harm the broader economy."

Shopping Cart Blues

Sooner or later, these higher production costs may show up at the supermarket, affecting everything from canned soup to a six-pack of soda pop. Can manufacturers, who often pass on increased costs to customers, voice concerns about a double whammy for American consumers[3].

"We pass these increases on to our customers—food producers, soft-drink makers, and beer brewers—and, in turn, they'll pass it on to consumers," explains Robert Budway, president of the Can Manufacturers Institute. "This looks to be a win-lose for American shoppers."

Shifting Sands of Authority

Trump opted for a different statute, Section 232 of the Trade Expansion Act of 1962, to justify these tariffs, instead of the 1977 emergency statute he's relied on for most other tariffs[1]. The legal battle around these previous tariffs is still ongoing.

Steel Magnates vs Statecraft Economists

Some factory owners remain optimistic about Trump's trade policies despite the increased raw material costs[4]. Drew Greenblatt, whose Michigan, Indiana, Maryland, and New Jersey companies produce steel items like wire baskets, is convinced the tariffs will drive foreign competitors to either set up shop in the U.S. or buy from domestic manufacturers like him.

However, experts fear the tariffs could put a damper on economic growth and worry about Trump's unpredictable trade strategy. "You can build walls and deploy tariffs all you want," remarks Woltz, "but you can't escape the fact that the Chinese dominate the global market."

Murky Waters of Uncertainty

Adding to the uncertainty, a recent survey showed that factory orders and production were under pressure due to the unpredictable nature of tariff implementation[5]. Some manufacturers warn that the continued volatility makes it tough to plan for the future. "It's like sailing through stormy seas," Woltz admits grimly. "It makes long-term decision-making incredibly difficult."

Enrichment Insights:

Impact on Downstream Manufacturing Jobs (continued): The increased costs from tariffs could lead to reduced demand for goods produced by downstream manufacturers, putting jobs at risk and potentially causing downstream manufacturing jobs to decline.
U.S. Steel Industry Benefits (modified): Although the steel tariffs may benefit the U.S. steel industry by increasing domestic production and potentially adding jobs, the overall economic impact could be negative due to increased costs for downstream manufacturers and the potential loss of jobs in those sectors.
Job Losses: Some researchers estimate that the increased steel and aluminum costs during the first Trump administration resulted in the loss of hundreds of thousands of downstream manufacturing jobs, not just tens of thousands[5].
Consumer Prices: In addition to the cost of the final product, consumers may also face increased costs due to inflation as a result of steel and aluminum tariffs. Although the overall impact on inflation may be modest, these costs could still affect consumer purchasing power and demand for certain goods.
Economic Contraction: The broader economic impact of tariffs, including the 2025 steel and aluminum tariffs, could include reduced GDP growth, potentially leading to slower economic growth and economic instability. Increased costs for manufacturers could lead to reduced investment and hiring, contributing to economic contraction.
The enhanced steel tariffs, while potentially benefiting the domestic steel industry, may lead to increased costs for industries that use steel as an input, which could strongly discourage hiring and harm the broader economy.
With the new steel tariffs, there is a potential for job losses in the downstream manufacturing sector, as the increased material costs may reduce demand for their goods, and potentially lead to a contraction in economic growth.

Steel tariffs doubling today poses a challenge for a North Carolina manufacturing company, questioning its ability to contend in an increasingly expensive market.