The Decibel - Trump doubles down on steel, aluminum tariffs

Episode Date: June 5, 2025

On Tuesday, U.S. President Donald Trump signed a new executive order that raised tariffs on steel and aluminum from 25 per cent to 50 per cent. One Canadian steel producer said this means that their American business is now ‘unviable’.Jason Kirby is a staff reporter for The Globe’s Report on Business section. He explains why these higher steel and aluminum tariffs could mean higher prices on nearly everything, and what may have contributed to Trump’s escalation. Questions? Comments? Ideas? Email us at [e-mail]

Earlier this spring, Globe reporter Jason Kirby traveled to Ohio to see the state of its steel industry. So I headed west out of Cleveland and I arrived at Lorraine and what you see immediately as you come into the town is this hulking hulking Republic steel mill that just dominates the skyline. And the other thing that jumps out to you immediately is that it's just this rusted, empty, barren wasteland. It really looks apocalyptic.

At its height, the Republic Steel Mill in Lorraine, Ohio, employed 12,000 people. But it's been left idle since 2016. It's become a symbol of how America's steel belt turned into the Rust Belt. In his first term, US President Donald Trump vowed to bring back this sector by imposing tariffs on foreign steel.

And he specifically promised that Republic Steel would hire a thousand people as a result. But that revival never happened. This is what he was saying in 2018, 2017, and this is what that actually looks like in reality today. Now Trump is once again raising tariffs to try and rebuild the industry. On Wednesday, steel and aluminum tariffs doubled to 50 percent, and this spells bad news for Canadian businesses and consumers.

Today, Jason is on the show to explain the ripple effects of these increased tariffs and what may have contributed to the timing of this escalation in America's trade war. I'm Menika Ramen-Welms and this is The Decibel from the Globe and Mail. Jason, thanks so much for being here. Thanks for having me on. So on Tuesday, the White House released a new executive order about steel and aluminum tariffs and this raised them from 25% to 50%. So Jason, what is the justification for this? Like what does Trump hope to accomplish by hiking these tariffs up to 50%?

Trump wants to make it so expensive for foreign steel to come into America that basically it doesn't. He wants to stop all steel, whether it's from Canada, whether it's from Mexico, whether it's from China, whether it's from South Korea, stop all steel from coming into the country, all in this goal of making the US self-reliant and boosting the manufacturing sector there and basically in yet another way, building that wall around America to create the more self-reliant nation. Okay, so the idea is don't bring in steel and aluminum, let's just make it domestically. We'll make everything we need at home, all of our companies that use steel

should just buy American steel, and everybody will be better off, that's the line. And the idea is that would translate into American jobs, I imagine, right? American jobs, of course. It's always American jobs with Trump. He always makes these big promises, how about the tens of thousands of jobs

that will be created from his actions. And, and this is again, one of those instances where that's what he claims will happen. Okay. Let's look at the impact here that, that we're seeing Canadian steel and aluminum producers have already been dealing with this 25% tariff, right?

That came into effect in March. How different will a 50% tariff be? There's a lot of companies that will say, you know, we could manage 25% tariff, you know, thanks to the Canadian dollar that's declined and just, you know, cost-cutting measures, we could deal with 25% tariff. We can't deal with a 50% tariff. That basically shuts off the US market from Canadian steel. There's no way around it.

It affects Canada a lot more than it affects other countries just because of how much we supply. You know, we account for roughly half of the aluminum that the US imports. We account for 25% of the steel that the US imports. We're the largest on both those fronts

when it comes to countries supplying those metals and it's not just the metals themselves, it's this time around versus what he did in his first term is it's products just the metals themselves, it's this time around versus what he did in his first term is it's products all the way down the line. Basically it's everything that's steel or aluminum coming into the US would incur this tariff, not just raw steel and rolls of aluminum.

Okay, so it's actually encompassing more items then. It encompasses more items and that's why it's even further felt in Canada this time. Okay so if it's gonna like shut off the American market for these Canadian companies I mean that's got to be a huge hit for them especially when it comes to you know their revenue and their jobs. Yeah very much so I mean you saw that with the CEO of Algoma Steel this week saying that unless you saw an incredible surge in steel prices basically its US business would become commercially

unviable. So I think people can clearly understand, you know, the impact on the companies that make these metals or that are sending things across the border. But what about the impact on the consumer, Jason? Like, what's going to be the cost of this on businesses that buy steel and aluminum and then the people who buy the products that are made from these materials? Well, I mean, what economists expect and what you see basically whenever you have this type of trade war and tariffs put in place is costs will rise.

You know, steel that goes into cars, whether it's a Canadian-made vehicle or an American-made vehicle, we have so much that goes back and forth across the border with how many a part crosses the border seven times or whatever before it goes into a finished product. Right. You know, anytime that that crosses the border, it's incurring those tariffs and that's just going to lead to higher prices. So far we haven't seen that for a number of reasons. Partly companies had knew that the trade war was basically coming.

They'd done a lot of stockpiling. They've been able to build up their inventories from their pre-tariff days. And you also have seen a lot of companies are very reticent about raising prices because they know it's going to scare off consumers. So there's this face off between businesses and the White House where, you know, we're going to try and hold on as long as we can knowing that at some point maybe you'll come to your senses or you're going to leave office eventually and we can go back to normal. A little gray zone here. Okay. I want to ask you a little bit more about the issue of

prices here. We've seen the price of steel it's already climbed 16% since January when Trump took office. I understand why prices for US imports of steel will increase because of the tariffs. I mean the tariff is essentially a tax added on to the cost of that right? But why does the overall price of steel increase? Like even for steel made in the US that's gone up. Yeah I mean if you're an American steel producer and your government comes along and says okay we're gonna now slap a 25% tariff on everybody that brings steel into the country. Well, that just basically paves the way for you to raise your prices. That's what it's meant to do.

It's meant to basically say you're free to charge more and as a result of charging more, you're supposed to then turn around and invest that money in new steel mills and hiring more people and everything. That's kind of the idea and that's why we see, you know, I've spoken to a few companies down there that said like the moment that Trump first imposed the steel tariff, the American steel companies immediately started to raise their prices because you basically are taking away their competition. And in the absence of competition, there's nothing kind of keeping those prices down. Yeah. So Canadian steel is going to cost more. So the American manufacturers like, well, we might as well raise our price a little bit to compete We'll raise it, you know and not really a little bit even and quite, you know

So we speak to some of these companies I spoke a couple of times with a the head of a company down there that makes wire mesh and it's used in all sorts of things security fencing but also lobster traps and they rely heavily heavily on Canadian steel for that because Canadian steel companies made that particular product. They've immediately seen all the prices rise. The frustrating thing I was speaking to him the other day is that they've actually gone to the US steel mills to try and say hey can you supply us and the majority of the I think he said

there's eight mills that make this particular product and I think he said five or six have said sorry we're at full capacity because everybody's asking us to do this now. So he's stuck still paying because he can't get that domestic supply. He's going to have to continue bringing it in. And now he's going to face instead of just a 25% increase, now it's going to incur a 50% costs. And he said that the challenge for him is he tries to then export his products to the world. Well, he's trying to do that competing with European and Chinese producers who don't have a 50% tax applied to the basic material that they make their goods out of. So he's at a serious disadvantage and complains that on the one hand, Trump loves

supporting this kind of inefficient steel industry while punishing all these smaller, efficient customers of steel in America. And that just means they can't invest, they can't hire and do hiring themselves and grow. So Trump has picked his winners, that's steel companies and everybody who's a customer of that becomes a loser. And you saw that immediately once the announcement, this latest announcement was made. Companies like Cleveland Cliffs, Steel Company, Newcore, all of these saw their stocks go 10, 20%

higher just immediately because they knew, investors know, okay, well, their profits are going to go up as a result of this. So it was very clear, you know, we've seen this before, we saw what happened in 2018, we know it's going to happen again as soon as you've got these kind of tariffs in place. But we established a little bit earlier too that this comes down to jobs, right? Trying to create American jobs. Do we know, like, is there evidence that these tariffs are actually going to have the effect of producing more jobs?

You can go back to 2018 to try and get a sense of that. So it's mixed. I mean, if you listen to Trump, everything Trump says, you know, that Trump does is a beautiful success. I mean, so if he says he's going to create this many jobs, he'll just tell you that he's created those jobs, regardless of what reality says. Reality is a bit grayer. Yes, there was new investments. There was some job creation in the steel industry back in 2018 when he

imposed tariffs last time, but there was also all these costs that were born by the steel using industries. There was an interesting study done at the time that for every job that was created in steel, steel profits increased by 270,000. So the steel industry saw its profits grow by $270,000 for each job that was saved by the tariffs. But steel using industries incurred a $650,000 cost for each steel job that was saved. So that doesn't sound so good then.

Profits are great for if you're a steel company and it's why you saw GM shares fall, you saw Ford shares fall, any heavy steel consuming companies were impacted by this. Interestingly, the GMs and the Fords, their stocks had kind of started to come back again, but that, you know, we can get into that a little bit later about how realistic the market now views some of these tariffs.

We'll be right back. Let's turn to Canada here, Jason, and kind of look at our perspective here. What can Canada do to protect its steel and aluminum industries, you know, in light of these new 50% tariffs? Yeah, it's difficult. You know, we've done some things. Canada has imposed counter tariffs to cover in total about $90 billion worth of US goods. So they did it in kind of two waves.

One was the initial counter tariffs that they imposed after Trump brought in the first round of tariffs on Canada that were tied to fentanyl and the border. So this is earlier this spring. This is earlier, yeah, earlier this spring. And then when the steel and aluminum tariffs came in, they announced a second wave of counter tariffs, Ottawa did, that applied to a lot of steel and aluminum products. Now the challenge is Canada in imposing tariffs on US goods doesn't want to in turn hurt

Canadian businesses that rely on those goods by driving up their costs and then that gets passed on to the consumer in Canada. So what they've done is they've created these, basically these exemptions on certain products that are used as inputs for manufacturers and processors in Canada. So that covers a lot of steel goods. So basically you're still allowing those companies to bring in a lot of steel and aluminum products that are used by those companies in Canada to make their own goods. There's a lot of debate right now about exactly what share of Canada's counter tariffs have this kind of exemption. You know, some economists say it's 50%.

The government says, no, it's lower than that. Uh, you know, and then on Wednesday we saw Prime Minister Carney address this. Uh, he, there was, the question was, are you going to retaliate with even more tariffs? And he said, not just at this moment. They're going to take some time, not too much time. He kept stressing some time, but not too much time to take a look at things in

light of the fact that they are in talks with the U S administration right now. He also pointed out that it's not just Canada that's getting hit. It's all countries are being hit by this, but you know, that kind of like wait and see approach has not sit well with everybody, you know, right away. Premier Ford in Ontario said, no, no, no, no, you should take stronger action. And he said, I'm going to be all over, you know, Carney to make sure he, he retaliates in a, in a strong and forceful way. And of course Ford's taking a big stand.

There's lots of steel jobs in Ontario, right? So that means a lot to him. You know, it's Ontario and Quebec are the, the, the two main provinces that are hit by this. Uh, you know, Ontario has the Stelco and the DeFasco and the Algoma steel mills. And, you know, the other thing that you hear the government talking a lot more about is the idea of using Canadian steel. You know, the Carney government has said that they're going to fast track and

start building nation building projects, energy corridors and all sorts of things that rely on steel and that, you know, that we'll be able to absorb some of that production that might've otherwise gone to the States. But it's, it's difficult because a lot of the products are very specific to, you know, a mill might make a very specific product that it has customers for in the States that you don't necessarily need when you're building a pipeline coming out of Alberta. So it's not going to be a one for one type thing. It can't be. You can't fully compensate the industry for the loss and the impact that they're going

to have as a result of these tariffs. Jason, let's talk about another piece of tariff news that we've recently heard about. Last week, the US Court of International Trade ordered Trump to stop most of his tariffs. So I think people might be wondering about this, right? Why is Trump able to sign this new executive order raising steel and aluminum tariffs when this just happened? Yeah, well, a couple of things. One, that order by a US trade court only applied to certain types of the tariffs that Trump has

imposed. So that would cover things like the tariffs that he put on Canada and Mexico related to fentanyl. It would cover the liberation day tariffs that he's imposed on basically every country and little island, you know, in the world. This is the liberation day on April 2nd. Yes, we remember that. Exactly, the liberation day and, you know, standing there with the big board of all the countries and everybody was like, where's my country on here? Oh, there's another board. Oh my gosh, there's another board. And it just kind of kept going.

Basically and that ruling just said that he overstepped his bounds by not going through Congress and they immediately sought to appeal that and they did find a federal appeals court that has allowed those tariffs to stay in place while they appeal the original decision. And I'm sure it'll go up to the Supreme Court and who knows how that will go. So those April 2nd tariffs, those are under the International Emergency Economic Powers Act, right? So that's like a very specific piece of legislation that he used. Exactly.

And that's how he was able to do that versus the steel and aluminum tariffs and these other sector specific tariffs that he does have more authority. I mean, there are court challenges for all of this, but at this point, you know, none have been successful on this. And it's basically what you're likely to see economists said after that ruling is maybe a shift to very sector specific tariffs, that there is a little bit more authority that Trump has through executive orders to impose. And so that's why I think timing wise, there's also for Trump an urge to be seen to have not lost his cudgel that, you know, in this court ruling kind of saying that, you know, your hands are somewhat tied.

He immediately has come back saying, well, I have other means that I can use. My bully pulpit is alive and well. I can use this in my negotiations with other countries using that leverage to force countries into making signing deals. And he said he was going to do countries into making signing deals. And he said he was going to do 90 deals in 90 days and the 90 days are ticking away. Okay, so bottom line, he's using a different mechanism right now to impose these steel and aluminum tariffs than he did before with the Liberation Day

tariffs. Okay, and the Liberation Day tariffs were the ones that were involved in this court decision. Jason, let's talk about the timing of these tariffs a bit more. You alluded to these tariffs a bit more. You alluded to this a little bit earlier. Why would Trump enact these tariffs now? Well, last week was very interesting. It wasn't just that you had the court ruling against it. You also had this very interesting narrative

start to emerge that kind of came out of an economics column blog out of the UK in the Financial Times called the Taco Trade. Basically, it's this idea that Trump always chickens out. T-A-C-O. T-A-C-O. And you saw this anytime where Trump had kind of imposed really strict on China, the 165% and you all of a sudden had the US dollar dropping, you had bond yields rising, you had this real uncertainty about

America's place in the world of finance and economics and whether it was a reliable, safe investment anymore. And as a result, you then saw Trump kind of backtrack on this. And he's done this repeatedly, this, I announced all this stuff upfront, chaos ensues. Then I kind of backtrack and, and, uh, and everybody starts to get adjusted to like the higher, oh, well, fortunately things aren't that bad. Now they're only this bad, you know, and you get this readjustment of psychology. But this idea of Trump always chickening out in the

face of market turmoil had kind of circulated in, amongst investors a lot. And what happened last week was a reporter in the White House put the question to Trump and he lost it. He was not happy. He was not happy. Don't ever say what you said. That's a nasty question.

Go ahead. To me, that's the nastiest question. Again, it gets to this idea that Trump's entire negotiating strategy is beating you into submission and then extracting some concessions from you. And if it's known and if the rest of the world starts talking about, you know, well, Trump just chickens out in the end. And, you know, it questions, it just really digs at his manhood and his, you know, his sense that he's the all

powerful leader of the world and everything that he might chicken out. Well, you know, if everybody starts to think that that's the case, you've also lost a lot of your clout and your power when you're in those negotiating, you know. So the problem is he's less likely to chicken out now if this does start to have a negative impact, you know, so you don't see the markets reacting as negatively this time around, but that might backfire on us all because it just might embolden him even more. So interesting. Yeah. Okay. So the new, the 50% steel and aluminum tariffs in a way, this might be him kind of pushing back, doubling down and showing some strength.

Essentially, it's a show of strength. I think it really is. He's got these reasons to look tough right now. And again, they don't make very much economic sense. History shows that. His own history shows that. But that's beside the point. Jason, I want to briefly ask you about the issue of steel dumping.

I know this is a concern in the steel industry. Can you just kind of briefly explain what that term means and how it's related to these tariffs? Yeah, yeah. I mean, steel dumping is basically the idea of countries overproducing steel. There's too much more capacity than there is demand for steel. In other countries, the accusation for China in particular is that it subsidizes its steel producers to just keep cranking out more and more steel products that it dumps onto the world market at below market rates.

Basically if it's cheaper steel people want to buy that. Cheaper steel people are going to want to buy that. So for at least the last decade, if not more, there's been a real push by the steel industry in Canada as well to encourage the government to do more to stop this steel dumping from China, from Vietnam, from Turkey, from South Korea, all these countries. This is exactly what Trump is saying that he wants to stop. And if that is coming in at below market rates, well now suddenly it's 50% more expensive, all of these imports. And he basically said that the 25%, there was too many countries managing to get steel into the United States still at 25%. They basically, he was saying, I didn't raise the barrier high enough. This time, no one's going to get around this. No one's going to get around 50%.

No one from China, no one from Canada. That's the challenge. This is very much aimed at countries like China and South Korea and Vietnam, but we're also part of that. Now we also have the Canadian steel companies have also been saying, well, we're also dealing with all of this steel being dumped in Canada. So we're also suffering from this. And so you actually saw Barry Zeckelman, he's the Canadian billionaire, kind of steel tycoon, and he's been really pushing, he's in the States, but he's been pushing, very supportive of Trump in taking these actions and saying Canada has basically brought this on itself by not taking a more serious

stance to stop steel dumping. And, you know, basically what he says is Canada is too slow to act. I think it was in April, the Canadian board of services launched an investigation into certain types of steel rods and that that are, you know, the accusation is that they're being dumped into the Canadian market. It's a slow process. There'll be an investigation, you know, and at some point they'll make a ruling and there may be some steel tariffs to come out of that that Canada imposes.

What you are always wary about though is that you end up, you know, taking its trade war and making it worse by spreading it and aiming the direction at each other. Right now we kind of have this world where we don't have a global trade war. We have a trade war of America with all, everybody else. What we haven't seen much of yet, and I think this is what a lot of investors and economists are worried about, is when for instance, China says, okay, well, where are we going to take all this steel that we're over producing? Well, are we going to just dump it into Europe and dump it into Canada? And then you start having trade wars between those countries. And that's how a global trade war actually spreads and becomes much worse.

Just before I let you go then, Jason, this kind of makes me wonder about the state of the trade war in general. If we're looking at what's happening now, especially with this increase in steel and aluminum tariffs, what does this escalation mean for where we're headed? I think it means that we're nowhere near the end of this, that this is going to continue. You know, we may see cutouts, we may see carve-outs. Canada is going to be pushing for speedy talks with the US as we renegotiate the Canada-US-Mexico trade agreement. But against that backdrop,

I just don't see this resolving anytime soon. It's politically, it's great for Trump. He loves this. He finds a lot of power in this. And he thinks that it's a winning strategy because he's doing it. And he thinks that anything Trump does is a winning strategy. So he's emboldened to keep

pushing for this. And so I think it means that this latest action shows that we're a lot closer to the beginning, unfortunately, of the trade wars than the end. Jason, appreciate you taking the time to be here. Thank you. Thank you very much. Jason Kirby is a staff reporter for the Globe's Report on Business section. That's it for today. I'm Maynika Ramon-Wilms. Our producers are Madeleine White, Michal Stein, and Allie Graham. David Crosby edits the show. Adrian Chung is our senior producer, and Matt Frainer is our managing editor. You can subscribe to The Globe and Mail at globeandmail.com slash subscribe.

Thanks so much for listening.