WASHINGTON—President Donald Trump has kicked off his second term with a bold tariff policy that is shaking up global trade.

After imposing a 10 percent additional tariff on Chinese goods to address the fentanyl crisis, the president took another step by imposing a 25 percent tariff on steel and aluminum imports.

While this move has raised concerns among U.S. trading partners, including the European Union, it has been met with praise from domestic metal producers and labor groups. Meanwhile, some economists have raised concerns about the potential inflationary effects of the tariffs.

The tariffs are set to take effect on March 4.

During his first term, Trump imposed a 25 percent tariff on steel and a 10 percent tariff on aluminum. While he later granted exemptions to several trading partners, including Canada, Mexico, and Brazil, he kept the tariffs in place for China.

Both the Trump and Biden administrations have accused China of dumping cheap steel on the global market. In May 2024, Biden further raised tariffs on Chinese steel and aluminum to reduce exposure to dumping and protect U.S. producers.

However, some Chinese companies are circumventing these tariffs through transshipments—routing goods through other countries that don’t have tariffs.

Christopher Tang, a supply chain management professor at the University of California–Los Angeles, believes China is using countries such as Vietnam to avoid the U.S. tariffs.

“They’ve done this by shipping steel products to Vietnam, where some minor value-added processes are done before sending them to the United States,” Tang told The Epoch Times.

China is also increasing its shipments of metals to countries in the Global South and Latin America, he added.

“Over the last 10 years, Vietnam has increased its steel production by 243 percent, meanwhile Vietnamese steel exports to the U.S. have increased by 264 percent since 2014,” the report states.

The regime in Beijing is also subsidizing its steel producers outside of China—particularly in Southeast Asian countries such as Indonesia.

The trade policies implemented during the first Trump administration created a more competitive environment for the American steel industry, resulting in significant investments in new and upgraded facilities, according to the AISI.

Kevin Dempsey, president and CEO of the AISI, welcomed the news as a step toward addressing market-distorting practices.

“AISI welcomes President Trump’s continued commitment to a strong American steel industry, which is essential to America’s national security and economic prosperity,” Dempsey told The Epoch Times in a statement.

He said he will continue to work with the Trump administration to implement a trade agenda that will level the playing field for American steelmakers.

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For the week ending Feb. 1, mills were running at 74.4 percent capacity, according to the AISI.

The United Steelworkers (USW) thanked Trump for addressing global overcapacity, as “bad actors like China” have attempted to flood international markets. However, the union pushed back against the White House punishing U.S. trade allies such as Canada rather than focusing on other nations that are undercutting U.S. industries.

“Canada is not the problem. Indeed, Canada has taken steps to coordinate their trade policies with the U.S. to respond to unfair foreign trade, and applying across-the-board tariffs ultimately hurts workers on both sides of the border,” David McCall, USW International president, said in a statement.

These sectors will see an increase in their costs in the short term, according to Sunderesh Heragu, professor at Oklahoma State University’s college of engineering.

“Businesses don’t like uncertainty,” Heragu told The Epoch Times. “They want something more predictable. And so if there is an uncertain environment, they could hold back on their capital expenditures.”

These businesses might not see a 25 percent increase in costs in the short term but rather a smaller rise, he noted, until their current inventory runs out.

Many business leaders also hope that these tariff threats are a negotiating tactic by the president, Heragu said.

The January consumer inflation report will be released on Feb. 12 and the annual changes in headline and core CPI are expected to remain steady, according to the forecasters.

However, the University of Michigan consumer survey showed that inflation expectations for a year from now jumped by 1 percentage point to 4.3 percent in February.

“Many consumers appear worried that high inflation will return within the next year,” Joanne Hsu, the survey’s director said. “This is only the fifth time in 14 years we have seen such a large one-month rise.”

Ewa Manthey, a commodities strategist at ING, forecast that aluminum tariffs will trigger higher domestic aluminum prices, with upside risk for the U.S. Midwest premium.

“The US Midwest premium, the best indicator of tariff risk, is already up more than 30 percent since Trump won the U.S. presidential election,” Manthey said in a note.

This additional cost to the base price of the metal will have a downstream effect on the broader economy, according to Mark Malek, the chief investment officer at Siebert Financial.

“Regardless of where the commodities come from, it is U.S. companies that will have to pay the tariffs,” Malek said in a note emailed to The Epoch Times.

“So, think about all the items in your home that contain either aluminum or steel, from your garage to your kitchen, to the structure itself. All of those items are likely to become more expensive as a result of these tariffs, if they are enacted. This would be supply-push inflation.”

These tariffs also represent additional upside risks to the inflation outlook for the Federal Reserve, Deutsche Bank economists said in a recent report.

He said he intends to implement reciprocal tariffs.

“Very simply, if they charge us, we charge them,” he told reporters on Feb. 9.

The European Commission said in a statement on Feb. 9 that it would respond to new tariffs.

“The EU sees no justification for the imposition of tariffs on its exports. We will react to protect the interests of European businesses, workers, and consumers from unjustified measures,” the statement reads.

In general, European countries view the imposition of tariffs as unlawful and economically harmful, according to the statement.