President Donald Trump announced on Air Force One Sunday that he would impose a 25% tariff on steel and aluminum imports, the latest move as part of the ongoing trade war between the U.S. and its allies.

Tariffs refer to taxes that are placed on imported goods, or products that come into the country. Importers have to pay tariffs to U.S. Customs and Border Protection, which could cause companies to increase prices on their goods to make up for the additional taxes they have to pay.

The move is meant to help domestic steel and aluminum companies, but could also cause local companies that rely on foreign steel to struggle.

The U.S. is the world’s second-largest steel importer, with the top three import sources being Canada, Brazil, and Mexico, although other countries, such as South Korea, heavily rely on exporting steel to the U.S.

Steel and aluminum are heavily used in the automotive and construction industry, but are also used to manufacture goods and appliances.

The decision mirrors the actions Trump levied during his first Administration, when he enacted a 25% tariff on steel and 10% tariff on aluminum, though some countries, including South Korea were exempt.

In response to the most-recent tariff announcement, shares of major South Korean steelmakers in the country fell on the stock market Monday morning, while that of U.S. steel companies rose.

On average, the U.S. imports more than 2 million metric tons of steel mill products per month, according to data by the Department of Commerce’s International Trade Administration, but only about a quarter of all steel in the U.S. is imported, as total steel imports have been decreasing year-over-year.

“You see these empty, old, beautiful steel mills and factories that are empty and falling down,” Trump said on the campaign trail in October 2024. “We’re going to bring the companies back. We’re going to lower taxes for companies that are going to make their products in the USA. And we’re going to protect those companies with strong tariffs.”

The U.S. imports about half of all aluminum it uses from other countries, mostly from neighboring Canada. The International Trade Administration reports that there’s been a significant increase of U.S. imports on aluminum, up 25% from 2015 to 2022.

Earlier in February, Trump threatened to impose a 25% tariff on most Canadian and Mexican imports, though he later decided to pause the tariffs for 30 days after negotiations with each country.

Trump also issued a 10% tariff on China which remains in place. The President said he will also charge retaliatory tariffs on other countries.

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What are tariffs and why is Trump using them?

US President Donald Trump has announced a 25% tariff on all steel and aluminium imports.

He has already introduced a 10% tax on all products from China - which has responded with its own measures - and has threatened to introduce tariffs on products from Canada and Mexico.

Trump says tariffs will boost the US economy and "protect" the country from illegal immigration and the flow of drugs.

What are tariffs and how do they work?

Tariffs are taxes charged on goods imported from other countries.

The companies that bring the foreign goods into the country pay the tax to the government.

Typically, tariffs are a percentage of a product's value. The 10% tariff on Chinese goods means a product worth $10 would have an additional $1 charge applied to it.

Firms may choose to pass on some or all of the cost of tariffs to customers.

Why is Trump using tariffs?

Tariffs are a central part of Trump's economic plans. He promised to introduce import duties against some of America's main trade partners during his election campaign.

He says tariffs will boost US manufacturing and protect jobs, as well as raising tax revenue and growing the economy.

The White House said said the president was also "taking bold action to hold Mexico, Canada, and China accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country."

Fentanyl is linked to tens of thousands of overdose deaths in the US each year.

The Trump administration says the chemicals come from China, while Mexican gangs supply it illegally and run fentanyl labs in Canada. Canadian Prime Minister Justin Trudeau said his country was responsible for less than 1% of fentanyl entering the US.

How will the steel and aluminum tariffs work?

Trump says the 25% tariff on both metals will come into effect on 12 March, with no exceptions.

The US is the world's largest importer of steel, with Canada, Brazil and Mexico its top three suppliers.

Canada also provided more than 50% of the aluminium imported into the US in 2024.

Shares of US steelmakers rose following the announcement. However, American companies which use steel and aluminium to make products have warned the tariffs could put their prices up.

The Canadian government said the tariffs were "totally unjustified" and vowed swift retaliation.

Trump previously announced tariffs of 25% on steel and 15% on aluminium in 2018, during his first term as president. However, he subsequently negotiated exceptions for many countries including Australia, Canada and Mexico.

Despite the exemptions, tariffs raised the average price of steel and aluminium in the US by 2.4% and 1.6% respectively, according to the US International Trade Commission.

What is happening with tariffs against China, Canada and Mexico?

Together, China, Mexico and Canada accounted for more than 40% of imports into the US in 2024.

China

A 10% charge on all goods imported from China to the US took effect on 4 February. Trump then said shipments worth less than $800 (£645) would be exempt.

Beijing retaliated with its own tariffs, which took effect on 10 February. These include a 15% tariff on US coal and liquefied natural gas products, and a 10% tariff on crude oil, agricultural machinery and large engine cars.

China has repeatedly voiced its opposition to a trade war with the US.

Canada

A proposed tariff of 25% on all goods entering from Canada was also due to begin on 4 February. However, this was delayed for 30 days.

Canada also paused its own retaliatory tariff of 25% on 155bn Canadian dollars' worth ($107bn; £86bn) of US imports.

PM Trudeau said Canada was implementing a "$1.3bn border plan" to add "new choppers, technology and personnel to border," as well as "increased resources to stop the flow of fentanyl". Much of the border security plan had already been announced.

Trump said the delay would allow the US to see "whether or not a final economic deal with Canada" could be reached.

Mexico

The proposed 25% tariffs against Mexico have also been delayed a month, as have new measures by Mexico against US goods.

Mexican President Claudia Sheinbaum agreed to send 10,000 members of the National Guard to the US-Mexican border to "prevent the trafficking of drugs, in particular fentanyl".

Sheinbaum said the US had in turn agreed to increase measures to prevent the trafficking of high-powered US weapons into Mexico.

Which products will be affected and will prices increase?

All goods from China worth more than $800 are covered by the 10% tariff.

Economists warn that firms selling imported goods are likely to increase prices for US consumers, to cover the cost of the duty.

If the measures against Mexican and Canadian imports go ahead, items they produce are also expected to become more expensive.

Car manufacturing could be hit extremely hard. Vehicle parts cross the US, Mexican and Canadian borders multiple times before a vehicle is completely assembled.

The average US car price could increase by $3,000 because of the import taxes, financial analyst TD Economics suggested.

Other goods from Mexico which could be affected include fruit, vegetables, spirits and beer.

In addition to steel, Canadian goods such as timber, grains and potatoes are also likely to get more expensive.

Canadian energy would face a 10% tariff instead of 25%.

US tariffs on imported washing machines between 2018 and 2023 increased the price of laundry equipment by 34%, according to official statistics. Prices fell once the tariffs expired.

Some experts suggest that Trump's new round of tariffs could prompt a wider trade war which could put prices up more generally.

Capitol Economics said the annual rate of US inflation could increase from 2.9% to as high as 4%.

Will the UK and Europe have to pay tariffs?

Trump previously told the BBC the UK was "out of line", but suggested a solution could be "worked out".

The UK exports pharmaceutical products, cars and scientific instruments to the US.

Business secretary Jonathan Reynolds said the UK should be excluded from tariffs because it buys more from the US than it sells there.

Speaking in Parliament after the announcement of the steel and aluminium tariffs, Trade Minister Douglas Alexander said the UK would not have "a knee-jerk reaction" but "a cool and clear-headed" response.

Trump also said he was considering imposing tariffs on the EU because "they take almost nothing [from the US] and we take everything from them".

In 2024, the US had a trade deficit of $213bn with the EU - which Trump described as "an atrocity".

European Commission President Ursula von der Leyen strongly criticised the new steel and aluminium levies.

"Unjustified tariffs on the EU will not go unanswered," she said.

US companies Harley Davidson, which manufactures motorcycles, and whiskey distilleries such as Jack Daniel's have previously faced EU tariffs.

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