The Metals Lobby’s Big Steal Americans now pay 75% more for aluminum than the rest of the world, and 64% more for steel.
The U.S.-Canada trade war escalated again Tuesday as Prime Minister Mark Carney announced new tariffs on some $20 billion in U.S. goods. That includes doubling Canada’s tariff rate on U.S. steel and aluminum to 50% to match Mr. Trump’s, and the political back story here is worth more attention. (…)
Call it a case study in how a narrow special interest calls the tune for the rest of the American economy. The current U.S. tariffs on metals date to Mr. Trump’s first term, originally set at 25% for steel and 10% for aluminum, in the name of national security. But his first Administration exempted Canada and Mexico to mitigate the damage to downstream U.S. users in manufacturing and construction.
Soon after taking office for a second time, Mr. Trump removed these exemptions, later raising the tariffs to 50%. After U.S. manufacturers that use steel and aluminum complained that the taxes made them less globally competitive, he imposed a 25% tariff on so-called derivative imports that contain the metals. Who knew stainless steel pots were a national-security threat? (…)
Americans are now paying roughly 75% more for aluminum than the rest of the world. Steel prices in the U.S. are also about 64% higher than in northern Europe. One reason these differential are larger than 50% is because the metal tariffs are stacked on top of other tariffs on China, which is the world’s largest producer of steel and aluminum.
The metal tariffs (including copper) have raised some $46.9 billion in revenue for the government during the current fiscal year through June, plus $21.8 billion in 2025. That’s good for politicians but a nearly $70 billion tax on Americans.
The higher prices have also been great for the share prices of aluminum and steel producers. (…) That’s nice for their investors, but U.S. businesses that use steel and aluminum—and their customers—are paying tens of billions of dollars more as a result. Whether they know it or not, they’re drinking it in every can of soda.
Protectionists say jobs in fabricated and primary metal manufacturing have increased 22,100 since Mr. Trump took office. But overall U.S. employment in manufacturing has declined 62,000. The metals tariffs help a few favored companies in two industries at the expense of everyone else. This is how tariffs work in practice, and once in place they are difficult to repeal as lobbies form to defend them.
By the way, President Trump admitted Monday that the U.S. needs aluminum from Canada—contrary to his social-media post the same day. “This country desperately needs aluminum,” Mr. Trump said during a telephone rally for a GOP candidate in Oklahoma. “We don’t have it. We get it all from Canada for the most part, and we need it badly.”
Thanks to his latest tariffs, we’ll now be paying much more for it after Mr. Carney’s decision to double Canada’s tariffs on U.S. steel and aluminum.
This may cause Mr. Trump to dig in further on his trade war. But it will also impose a cost on the industry groups egging on his protectionism and maybe teach them that their tariff border wall isn’t free.
(Yardeni Research)
- How Will the New Canadian Tariffs Affect the U.S. Economy? Levies to take aim at big industries, like aluminum and steel, in addition to smaller ones located in states with closely watched midterm elections
Canada on Tuesday announced tariffs on roughly $20 billion of U.S. goods, days after the U.S. escalated trade tension by enacting new levies on $20 billion of Canadian goods. (…) Trade experts and economists said Canada’s levies would exert pressure on Republican candidates running in key races in the U.S. midterm elections. (…)
Canada said levies of 50% will affect steel and aluminum products that were previously subject to a 25% tariff, along with furniture and clothing. Goods facing 25% tariffs include appliances, dairy products and seafood. (…)
Half of the lobster caught in Maine goes to Canada, he said, and Maine has an important election this fall that will help determine control of the Senate.
“The states that are most reliant on Canada as an export market are often the northern-tier states—Maine, Michigan, Minnesota, Wisconsin, New Hampshire,” Gresser said. Canada is “trying to show the Republican party that there’s a systemic cost to doing this sort of thing.”
Cheese and other dairy items Canada is targeting are produced in Wisconsin, New England and other states.
Other targeted goods include motorcycles, farm equipment and appliances. Milwaukee-based Harley-Davidson sold 6,400 motorcycles in Canada last year, about 5% of its worldwide total. John Deere and other manufacturers produce farming equipment throughout the Midwest, including in Illinois, Iowa and Wisconsin. Appliance production is concentrated in Ohio and Kentucky. (…)
The Canadian measures don’t take effect until Sept. 8, and an even more punishing tariff response that Trump threatened on Monday—imposing 50% tariffs on automobiles and parts from Canada—wouldn’t take effect until January. So there is time for both sides to “gauge what the costs are and maybe find alternative solutions,” said Jeff Schott, a trade expert at the Peterson Institute for International Economics. (…)
One legal avenue for the U.S. to justify escalation: the clause Trump used to impose his Aug. 22 tariffs on Canada—section 338 of the Trade Act of 1930—allows the U.S. to ban goods from countries that retaliate against such tariffs, according to Barry Appleton, co-director of the Center for International Law at New York Law School.
- US Weighs More Trade Measures Against Canada After Retaliation The already-tense relationship has plunged into outright acrimony.
Like most other automakers, Honda relies heavily on the North American supply chain to make the vehicles it sells here. The automaker had five of the top 10 vehicles on Cars.com’s annual American-Made Index this year. (…)
For now, “we are trying to absorb the cost by ourselves or together with our suppliers,” Kaihara said at the event tied to the Freedom 250 Grand Prix in Washington, D.C. (…)
- Honda currently assembles the Civic sedan at a facility in Canada, where it’s the second-largest vehicle manufacturer by volume.
- Honda said in January that it expects to sell 1.43 million vehicles in the U.S. in 2026.
Kaihara, whose comments came before Trump’s auto tariff announcement, made it clear that the automaker’s plans to build an eighth assembly plant in North America hang in the balance.
“If there’s no USMCA agreement in the future, then we may have to change our direction,” he said. (…)
Huawei AI Data Center Bid in Egypt Spurs US to Mull Counter
Huawei Technologies Co. has bid to build AI data centers for the Egyptian government, demonstrating its global chip ambitions and drawing alarm in Washington — where officials are working to assemble a counteroffer. (…)
If successful, the project would mark early progress for China’s campaign to challenge American dominance in global AI infrastructure. It would make Huawei a key AI provider to Africa’s second-largest economy and lend a foothold in the Middle East, where the US has aggressively invested in the more lucrative AI data center markets of the United Arab Emirates and Saudi Arabia. It also could be the first known export of Huawei’s Ascend accelerators after more than a year of attempts.
When President Donald Trump’s administration learned of the pitch, the State Department reached out to companies including Nvidia, Advanced Micro Devices Inc. and Microsoft Corp. about pulling together a US consortium to counter Huawei’s AI chip bid (…).
Trump’s team has also warned the world that using certain Huawei accelerators without Washington’s approval could result in legal penalty, though it’s unclear whether officials have invoked that guidance in conversations with Cairo. (…)
The tender process may be the first time the US and China have directly competed for the same government AI data center project. How it unfolds will be a test of Huawei’s chip capabilities, Trump’s nascent efforts at emerging-market semiconductor diplomacy, and Egypt’s ability to navigate diverging ecosystems while maintaining control over its AI future. (…)
Huawei’s bid builds on a decades-long presence in Egypt, a north African nation of more than 100 million people that has steadily deepened its cooperation with China in recent years, from trade to military drills. Winning the data center contract would boost Huawei’s presence in a region key to its global vision — and demonstrate that there is indeed foreign demand for its AI chips, which significantly trail Nvidia’s in volume and capability.
American AI infrastructure companies, meanwhile, haven’t historically viewed Egypt as a target market, nor has the country been a top priority for Trump’s AI diplomacy efforts.
Next week, Chinese leader Xi Jinping is set to make his first Egypt trip in more than a decade.