Photo by Jacob Morch
Donald Trump announced 25 percent tariffs on foreign steel and aluminum imports on February 10, doubling down on his protectionist agenda to “boost” the U.S. economy through import taxes, a move that could disrupt trade with key partners. Set to take effect on March 4, the tariffs will impact the 25 million tons of steel the U.S. imports annually. This follows a White House decision to delay tariffs on Canada and Mexico, two of the largest steel exporters alongside Brazil and South Korea.
The move marks another step in Trump’s aggressive trade policy, coming just days after the administration imposed a sweeping 10 percent tariff on Chinese imports, escalating tensions with global trade partners. The policy enforces tariffs “without exceptions or exemptions,” ending carve-outs previously granted to certain nations and raising aluminum duty rates. This mirrors Trump’s 2018 tariffs during his first term, which triggered global retaliation. By rejecting multilateral trade norms, the move risks escalating trade disputes while prioritizing economic nationalism over diplomatic engagement, despite warnings of market disruptions and strained international relations.
Trump has also hinted at reciprocal tariffs on countries imposing duties on U.S. imports, though specifics on exemptions or targeted nations remain unclear: “If they charge us, we charge them.” Given that Canada, Brazil, Mexico, and South Korea are major steel and aluminum sources, the policy may worsen critical trade ties and increase international trade tensions.
Fears of a perfect storm in world trade have already been triggered by President Donald Trump’s announcement of wide-ranging tariffs on products from Mexico, Canada, and China. Enacting executive authority to tackle the “major threat” of illegal immigration and drug trafficking—including fentanyl—Trump imposed 25 percent tariffs on goods from Canada and Mexico as well as 10 percent on Chinese imports. Additionally, he promised trade restrictions on European goods and intends to introduce “reciprocal tariffs” on other nations very soon. Historically, Trump has always argued that focusing on countries having trade surpluses against the United States would boost the American economy and has even mentioned tariffs as a possible substitute for an income tax.
Once again Trump has supported a protectionist economic plan despite acknowledging their potential economic damage on the United States and calling it a required price. America’s three biggest trading partners—China, Mexico and Canada—reacted immediately. While China imposed countermeasures aimed at U.S. exports including crude oil, LPG, and farm machinery, Canada and Mexico reacted with punitive tariffs. Beijing has also started a Google antitrust investigation and threatened to bring suit against the United States at the World Trade Organization (WTO).
Investors in Asia and Europe are preparing themselves for the consequences of an escalating trade conflict. The interruption of global supply networks, increased stock market volatility, and worries of lasting financial instability highlight the wide-ranging effects of Trump’s tariff-based approach on the international economic system.
Far from providing the unilateral advantages he contends, Trump’s tariff war will exact a great cost on the American economy. Given that rising business expenses are passed on to consumers, the most immediate outcome would be accelerated inflation, which provides a sharp contrast to Trump’s pledge to control rising costs. Greater tariffs will interrupt global supply chains, stifling growth and investment, lowering borrowing costs, and even hurting U.S. exports. The measures are predicted to hit particularly hard leading industries such as agriculture and the car sector. Should Trump expand this tariff conflict to Europe, the financial consequences for the United States would amplify, lowering growth and aggravating internal issues. Far from what Trump claims, the expenses of this protectionist approach more than exceed any potential advantages.
History shows clearly how Trump’s trade initiatives have faltered. Under the pretense of lowering the U.S. trade deficit, he started a trade war with China during his first term by means of $400 billion in tariffs. Six years later—even as President Biden continued with this protectionism—the deficit has hardly shifted. Indeed, this trade war has never really been about the deficit. Rather, it is part of a general U.S. policy to restrain the ascent of China. Trade restrictions and attempts to limit China’s access to sophisticated technologies, notably semiconductors and AI development, have been part of this plan. The United States has been trying everything to slow down China’s economic rise. The attempt to contain the Chinese AI startup DeepSeek for it not only showcases China’s resilience but also reveals the weaknesses of American attempts to block its technological and economic advancement.
The ultimate outcomes of Trump’s tariff policies remain uncertain, but one consequence is undeniable: the United States is steadily dismantling the rule-based international order established after World War II, a system anchored in free trade and globalization. By withdrawing from international treaties and organizations and doubling down on protectionism, the United States is undermining the very framework that has sustained global stability. This shift risks creating greater chaos and instability at both global and regional levels. Moreover, a transactional approach to trade wars alienates allies and fails to significantly curb China’s rise, while simultaneously destabilizing the global economic order. In pursuing short-term gains, the United States risks long-term damage to its interests and the foundations of the international system it once championed.
This first appeared on FPIF.
