On March 12 (local time), the US began imposing a 25% tariff on all aluminium and steel imported into the country. The US government said that this tariff was restored to increase protection for domestic steel and aluminium producers.
Earlier, on March 4, President Trump imposed a 25% tariff on goods from Canada and Mexico. He also increased tariffs on imports from China and threatened to increase import tariffs on goods from the European Union, Japan and the Republic of Korea. President Trump said that his tariff policy would protect American jobs.
However, US businesses warn that the uncertainty caused by President Trump's tariff threats and changing trade policies is starting to negatively impact many industries and is causing US consumers to cut back on spending on everything from essential goods to travel. Consumer spending accounts for 70% of the US economy.
Trump's tit-for-tat tariff moves against major trading partners have pushed US businesses and consumers into a state of uncertainty. Raising tariffs will increase input costs, forcing companies to warn of possible price increases, shifting the burden to consumers, leading to a risk of rising inflation and slowing economic growth.
Trump's tit-for-tat tariff moves against major trading partners have pushed US businesses and consumers into a state of uncertainty. Raising tariffs will increase input costs, forcing companies to warn of possible price increases, shifting the burden to consumers, leading to a risk of rising inflation and slowing economic growth.
During his first term, President Trump imposed a 25% tariff on imported steel and aluminium. Research by the International Trade Commission (ITC) found that the steel and aluminium tariffs increased import prices, encouraging US steel and aluminium consumers to use more domestic products. The increased demand pushed up prices for the metal, helping US steel and aluminium manufacturers expand production, resulting in a 2.25 billion USD increase in output value in 2021.
But the rising steel and aluminium prices also increased production costs for industries that use a lot of steel and aluminium, leading to a total decrease of 3.48 billion USD in output value, which is greater than the increase in value for the US steel and aluminium industry. This time, President Trump increased tariffs just as inflation was rising again, reaching 3% in January 2025, the highest since June 2024.
While President Trump has played down the short-term impact of his policies, concerns about the economic fallout intensified late last week after he declined to predict whether his policies would trigger a recession.
On March 11, the S&P 500, a composite of U.S. retail companies, lost 5 trillion USD from its peak last month, when Wall Street welcomed much of Trump’s agenda. The index has fallen 13% in 2025, reaching its lowest level in more than 12 months.
The S&P 500 has lost more than 7% so far this month, while the Dow Jones Industrial Average and the Nasdaq Composite, a gauge of U.S. technology companies, have fallen 6.8% and 10.2%, respectively.
Delta Air Lines warned that economic concerns among U.S. consumers and businesses have hurt domestic travel, sending airline stocks tumbling. Major retailers Walmart and Target have also lowered their expectations as inflation risks and recession fears mount.
In an interview with Fox News on March 9, President Trump said the U.S. economy could experience some turmoil during the transition period and that U.S. investors and consumers should not just focus on the stock market.
The long-term impact of the tariffs is still unknown, but Pimco, a U.S. company that manages 2 trillion USD in investment assets, has raised its forecast for the possibility of a U.S. recession this year to 35 percent, up from 15 percent in December 2024.
