If the Goal Isn’t Price Stability, Then What Are These New 50% Tariffs Really About?

During a rally at U.S. Steel’s Mon Valley Works–Irvin Plant near Pittsburgh last Friday, U.S. President Trump announced plans to raise tariffs on steel and aluminum imports from 25% to 50%. These new “Trump Tariffs” are set to take effect on June 4, 2025, and will not only apply to primary and semi-finished steel and aluminum but also to derivative products—items that contain these metals, such as automotive parts, machinery components, and other manufactured goods.

Trump claimed the tariff hike would “further secure the steel industry in the United States.” Many domestic steel and aluminum producers immediately welcomed the move, including Jesse Gary, President and CEO of Century Aluminum, the nation’s largest primary aluminum producer. Gary responded by announcing plans to build “the first new aluminum smelter in the U.S. in 50 years” and to double domestic production.

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“Trump Tariffs” Are Nothing New

Whether any of these plans come to fruition remains uncertain. During Trump’s first term, he introduced similar tariffs with the stated goal of supporting domestic investment, but actual investment remained modest. While short-term fluctuations certainly occurred, production largely followed broader economic cycles and global steel market trends.

It is likewise important to note that building a steel or aluminum mill typically takes nearly a decade from planning to rolling, and these facilities require a life expectancy of 30–40 years. Meanwhile, Trump—and potentially his current trade policies—could be gone in four years. This could happen even sooner if he succeeds in achieving what many believe to be his true goal: improving terms with America’s trading partners.

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Tariffs as Trade Leverage

There is an alternative argument circulating about the broader strategy behind the use of Section 232 tariffs on steel and aluminum. European leaders have referred to Trump’s strategy as “bazooka diplomacy.” The strategy largely uses tariffs as blunt-force leverage to extract concessions or policy changes from trading partners. His aim appears to be less about long-term protection of domestic industries and more about forcing countries to change their trade practices, or, in the case of America’s closer neighbors, to address broader issues like migration or drug trafficking.

As a negotiating tactic, this strategy will likely prove effective with partners such as the EU, UK, Japan, and South Korea, all of whom are already in talks with U.S. trade officials to mitigate or avoid these sweeping tariffs. It’s likely any resolution will require some mutual adjustment of tariff levels.

For years, the U.S. has faced a fundamental imbalance in tariff structures with major trade partners, so some degree of re-balancing may be long overdue. However, if re-balancing is the true intent behind Section 232 steel and aluminum tariffs, then domestic producers could be making a mistake by investing under the assumption that the new 50% Trump tariffs, or even the previous 25%, will persist long term.

No major U.S. trading partner currently imposes such steep duties on U.S. steel and aluminum. So, if tariffs ultimately align with international norms, rates could fall back to the low single digits. If this happens, domestic producers banking on long-term protection may find themselves overextended.

Could Tariffs Represent a Long-Term Solution?

A good friend of mine often says, “Don’t take Trump literally, take him seriously.” By this, they mean, don’t fixate on his exact words, but recognize that he’s serious about pursuing strategic objectives. That’s proven to be wise advice. But in this case, it’s difficult to determine what Trump’s core objective truly is.

Is he trying to shore up the domestic steel and aluminum industry for the long haul? If so, high double-digit tariffs may stick around. Is he using these tariffs as leverage for broader trade negotiations? In that case, they are likely to be dramatically scaled back if new deals are struck.

Despite industry promises of large-scale investment, few of those plans will likely materialize if tariffs drop back to single digits. Still, boosting domestic production has remained a central goal for the Trump team since day one, so Section 232 tariffs may well stay in place. Even if they don’t remain at 50%, a moderately elevated rate may become the new normal. Meanwhile, broader tariffs on other goods likely fall under the “trade negotiation” category and could be waived or sharply reduced as trade agreements are finalized.

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The UK Planning Countermeasures

But a development this week suggests that even Section 232 tariffs could be more about negotiation than permanence. The UK is currently negotiating the U.S.-UK Economic Prosperity Deal (EPD), which holds the potential for minimal or zero tariffs between the two countries. In reality, there’s little trade imbalance, if anything, the UK runs a trade deficit with the U.S. Yet this week, the Trump administration announced the UK would not face the additional 25% increase to 50% on steel and aluminum while negotiations continue. That move strongly suggests that favorable trade agreements could limit the lifespan of the higher tariffs.

One thing that is certain is that Trump has consistently prioritized his domestic audience. While it seems almost inconceivable that he would saddle American consumers with 50% Section 232 tariffs indefinitely, we may have to accept that high double-digit tariffs on steel and aluminum could be part of the long-term landscape, even as tariffs on other goods gradually decline. If I were a betting man, I wouldn’t place high odds on Century Aluminum’s promise to double domestic primary aluminum production