A 25% tariff on all steel and aluminum imports to the U.S. is set to go into effect next month, eliminating previous exemptions for major trade partners like Canada, Mexico, Brazil, and the European Union.
This expanded tariff, announced by President Donald Trump, is expected to raise costs for U.S. businesses importing these metals, and there is concern that some of these costs will be passed on to consumers.
Since steel and aluminum are essential components in many products, the price of several everyday items could rise. For example, around 70% of the steel used in the U.S. to make food cans is imported, primarily from countries like Germany, the Netherlands, and Canada, according to the Can Manufacturers Institute (CMI), a group representing can makers.
In 2018, when Trump first imposed tariffs on steel, many can manufacturers were granted exemptions, allowing them to import steel tariff-free. However, the U.S. steel industry’s limited production capacity for the specific type of steel used in cans led to an increase in prices. The CMI has warned that without these exemptions, the prices of canned food made in the U.S. are likely to rise. Robert Budway, president of the CMI, stated, “While the president may believe these tariffs are protecting the steel industry, they are undermining our food security and supply resilience for American canned food, which Americans rely on every day.”
Aluminum producers, including brewers and companies like Coca-Cola, are also concerned about the impact of the tariffs. The beverage giant warned that higher aluminum costs could lead to price hikes for consumers. Coca-Cola’s CEO, James Quincey, noted that while they are adjusting to the changes, they are not immune to the price increases.
Trump has confirmed there will be no exemptions from the new tariffs for individual products or countries. However, some industries hope the administration may reconsider. For example, automakers like Ford and General Motors had previously warned that tariffs on steel and aluminum would add approximately $1 billion to each company’s costs. Morningstar analysts estimated that these tariff-induced cost increases would result in about a 1% price rise for customers, roughly translating to a $300 increase in vehicle prices.
While it’s unclear how consumers will ultimately be affected, Michael Wall, an auto analyst at S&P Mobility, noted that companies might choose to absorb some of the costs rather than pass them all to buyers, given the affordability pressures in the market. However, the new tariffs on imports from Canada and Mexico—still on hold until March—are expected to have a much more significant impact. Ford’s CEO, Jim Farley, has already warned that Trump’s moves are creating “a lot of cost and a lot of chaos” for the auto industry.
TD Economics predicts that cars could increase in price by up to $3,000 if tariffs on all goods from Canada and Mexico are implemented.
The construction industry, one of the largest users of steel, is also expected to face higher costs. Steel is a critical material for everything from building frames to home appliances. Carl Harris, chairman of the National Association of Home Builders, warned that the tariffs on steel and aluminum contradict Trump’s goal of making housing more affordable, predicting that the additional costs would raise prices and hinder development.
“Ultimately, consumers will pay for these tariffs in the form of higher home prices,” Harris said. The National Association of Home Builders has urged Trump to exclude building materials from the tariffs.
Appliance manufacturers are also vulnerable to price increases. For example, Whirlpool experienced a $350 million increase in costs due to rising steel prices after the 2018 tariffs. Companies that can’t absorb such costs will likely pass them on to consumers in the form of higher prices for household goods.
In conclusion, if the tariffs take effect as planned, American consumers could see price increases on a wide range of products, from cars to home appliances, food cans, and construction materials. The true impact will depend on how businesses adapt to the new costs and whether they choose to absorb or pass them along to buyers.
