NEW YORKโ President Donald Trumpโs expanded metal tariffs took effect Wednesday, ending exemptions for major trade partners, including Canada, Mexico, Brazil, and the European Union. As a result, American consumers may soon face higher prices for a range of everyday products. The 25% tax on all steel and aluminum imports could translate to increased costs for everything from canned food to automobiles, with industry experts warning of potential ripple effects throughout the economy.
The Tariff Landscape
The Trump administration has imposed a 25% tariff on steel and aluminum imports, designed to protect domestic metal producers but with potential ripple effects across the economy. This isnโt the first time such tariffs have been implementedโin 2018, similar measures led to cost increases for businesses and consumers. The difference now is that no countries or products are exempt, potentially creating broader economic impacts.
The Can Manufacturers Institute (CMI) reports that approximately 70% of the steel used in US can manufacturing is imported, primarily from Germany, the Netherlands, and Canada. The organization warns that grocery prices for canned foods could rise without tariff exemptions.
Canned Food, Beer, and Fizzy Drinks
The food and beverage industry faces significant challenges due to the new tariffs. According to the Can Manufacturers Institute (CMI), about 70% of the steel used in the US to make food cans is imported today, coming from countries such as Germany, the Netherlands, and Canada.
After Trump ordered tariffs on steel in 2018, many can-makers won โexclusionsโ from those import taxes, over the objections of steelmakers, given the limited production of the type of steel used to make cans in the US. Since then, steel manufacturers have cut production further, pushing up prices, warned the CMI, which sent a letter to the Trump administration earlier this month signed by big food companies, including General Mills, Del Monte, and Goya.
Robert Budway, president of the CMI, said that grocery prices for canned foods made in the US will likely rise without can manufacturersโ exemptions from the steel import tariff.
โWhile the president may believe that these tariffs are protecting the steel industry, they certainly are undermining our food security and our supply resiliency for American canned food, which Americans rely on every day,โ Mr Budway said. Regarding aluminium, brewers and makers of fizzy drinks, such as Coca-Cola, have warned that the move will add costs and could lead to higher customer prices.
โWe control enough variables that we can adapt and mitigate our way through what is happening,โ Coca-Cola chief executive James Quincey told investors this week. 
Cars
The automotive industry, already facing affordability pressures, may see further price increases due to metal tariffs.
After Trump imposed tariffs on steel and aluminum during his first term, carmakers, including Ford and General Motors, warned that the measures would add about $1bn to each cost.
For customers, Morningstar estimated the tariff costs back then would result in a roughly 1%, or a $300 price rise for customers.
David Whiston, an analyst at Morningstar, warned that Ford could face a similar cost increase this time but said how consumers would be affected was unclear.
Affordability pressures in a market where sales have yet to return to 2019 levels could limit how much of the costs companies choose to pass on, according to Michael Wall, an auto analyst at S&P Global Mobility.
But he said it was still โrealisticโ to expect some of the costs from the metals tariffs to trickle down to buyers.
However, he noted that Trumpโs announcement of tariffs on all goods imported from Canada and Mexico, currently on hold until March, would have a much bigger impact on buyers.
At a business conference, Ford chief executive Jim Farley warned that Trumpโs recent moves were causing โa lot of cost and chaosโ for his industry.
TD Economics has estimated that if blanket tariffs on goods from Mexico and Canada came into force, cars could increase in price by about $3,000.
Construction, Housing, and Appliances
The construction industry as a sector is one of the single biggest users of steel, which developers and homebuilders need for everything from building frames to appliances.
Carl Harris, chairman of the National Association of Home Builders, said the decision to impose tariffs on steel and aluminium ran โtotally counterโ to Trumpโs stated goal of making housing more affordable, warning it would raise costs and deter development and rebuilding.
โUltimately, consumers will pay for these tariffs in the form of higher home prices,โ he warned. The National Association of Home Builders has urged the president to exempt building materials from the proposed tariffs.
After Trump imposed steel tariffs in 2018, appliance maker Whirlpool faced an unexpected $350m jump in costs, which it said was driven by the increase in steel prices.
Companies unable to absorb such costs would likely pass them on through higher prices in the shops.
International Reactions and Trade Implications
The European Union has announced it will impose counter-measures on โฌ26bn (ยฃ21.9bn, $28.3bn) worth of US goods in response to the tariffs. This escalation in trade tensions could lead to further retaliatory measures from other trading partners, potentially sparking a broader trade war.
Canada and Mexico, two of Americaโs closest trade allies, have also indicated they will defend their economic interests. The potential for expanded tariffs on goods from these countries remains a concern for American businesses that rely on cross-border supply chains.
Industry experts suggest several potential scenarios for how businesses will respond to the tariff increases:
- Cost Absorption: Some companies may absorb tariff costs rather than immediately raise prices, potentially affecting their profit margins.
- Price Increases: Many businesses will likely pass at least some costs on to consumers through higher prices.
- Supply Chain Adjustments: Companies may seek alternative suppliers or materials to mitigate tariff impacts, which could lead to changes in product quality or availability.
The full economic impact of these tariffs remains to be seen, but American consumers could face higher prices for everyday products. From your pantry to your next car purchase, the effects of these trade policies may soon be felt in wallets across the country.
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