WSJ What’s News: Why Trump’s Tariffs Will Push Up U.S. Steel Prices

Release Date: March 12, 2025
Host: Luke Vargas
Producer: Daniel Bach and Kate Bullivant
Supervising Producer: Sandra Kilhoff

Introduction

In this episode of WSJ What’s News, host Luke Vargas delves into the ramifications of President Donald Trump's latest trade measures, specifically focusing on the newly implemented tariffs on U.S. steel and aluminum imports. The discussion extends to the global response from major trading partners, the potential impact on domestic industries, and ancillary stories that influence the broader economic landscape.

Trump’s Steel and Aluminum Tariffs

Overview of the Tariffs

At [00:56], Vargas introduces the topic by highlighting the imposition of a 25% tariff on all steel and aluminum imports, mirroring the 25% steel and 10% aluminum tariffs from Trump's first term. The administration justifies these measures as necessary to combat what it perceives as an "unfair global steel trade," wherein foreign subsidies and trade barriers allow other countries to offer steel at lower prices than domestic U.S. producers.

Impact on Global Steel Producers

Vargas engages with Nicole Vogt, Managing Director at Boston Consulting Group and Global Metals Co-Lead, at [02:03] to discuss the global implications:

Nicole Vogt ([02:10]): "The whole world is watching that... short term the US will most likely be impacted because you cannot change that quickly your production set up than to produce everything locally."

Vogt elaborates on the immediate challenges the U.S. faces in substituting imports with domestic production, noting that "the U.S. built up roughly 20% of the capacity. However, imports only declined by 5%" since Trump's initial tariffs. She emphasizes the level playing field now established by removing exemptions, compelling all importers to compete based on landed costs.

Effects on Domestic Industries

At [05:03], Vargas probes further into which sectors within the U.S. are most susceptible to these tariffs:

Nicole Vogt ([05:10]): "All downstream, steel intensive, good manufacturers, small medium enterprises... your prices go up and this means you are affected by the increased prices."

Vogt identifies that industries reliant on steel, such as automakers, pump manufacturers, and hardware producers, will bear the brunt of rising steel prices. She notes a 25% surge in U.S. steel prices post-announcement, compared to a modest 5% increase in the EU and stability elsewhere.

Global Reactions to U.S. Tariffs

European Union’s Response

At [05:55], Vargas reports the EU's retaliation:

Luke Vargas ([06:00]): "The EU says starting April 1st it'll place duties on around $28 billion in American products... but stressed it was open to negotiation."

The EU plans to impose duties on various American goods, including bourbon, whiskey, boats, and motorcycles, signaling escalating trade tensions but also leaving room for diplomatic negotiations.

Australia’s Stance

Australia opts for a different approach, as Vargas explains at [05:55]:

Luke Vargas ([06:05]): "Australia isn't retaliating... instead, he's pursuing a tariff exemption... Australia trades at a deficit with the US."

Australia's Prime Minister argues that retaliatory tariffs would be "economic self-harm" and seeks exemptions to mitigate the impact, reflecting a strategic choice to protect consumers from price hikes.

Greenland’s Political Climate

The episode touches on geopolitical maneuvers involving Greenland:

Political Analyst ([11:17]): "This can be seen as a setback for President Trump... the winning party is centre right... strengthens Greenlandic economy before a secession from Denmark."

Greenlanders have voted to slow down the push for independence from Denmark, countering Trump's ambitions to increase American influence and potentially annex the territory for its mineral resources.

Additional Economic Insights

Consumer Price Index (CPI) and Inflation

At [07:27], the discussion shifts to the upcoming release of the February CPI:

Seth Carpenter ([07:53]): "Inflation is the change in prices, it's not the level of prices... Fed is going to be thinking about inflation and asking, okay, with all the available information, does it look like the trend is down?"

Economist Seth Carpenter of Morgan Stanley suggests that while technical inflation metrics may be improving, public perception of rising prices remains a concern. He anticipates the Federal Reserve might lower policy rates by mid-year based on these trends.

U.S. Government Funding and Policy Changes

Vargas highlights House Republicans' narrow passage of a government funding proposal aimed at preventing a shutdown:

Luke Vargas ([10:00]): "Republicans said their funding plan would clear the way for the GOP to move ahead with President Trump's agenda... Democrats have painted the proposal as an effort to hand more congressional power over federal spending to Trump and Elon Musk."

The proposal includes potential deep cuts to programs like Medicaid, which could have broader implications for state budgets and healthcare services.

Education Department Workforce Reduction

The Education Department is set to cut its workforce by approximately 2,000 jobs, including over 1,300 federal workers:

Luke Vargas ([10:45]): "Senior department officials said full teams whose operations are seen as redundant or unnecessary are being cut... the changes wouldn't affect department functions such as delivering federal student aid."

These cuts are part of broader efforts to streamline federal operations in anticipation of potential executive orders to dismantle the agency.

Ireland’s Economic Balancing Act

With St. Patrick's Day approaching, Ireland faces delicate trade negotiations amidst robust economic growth driven by American multinational companies:

Chelsea Delaney ([12:00]): "Ireland had this huge economic explosion... driven in large part by American companies... makes Ireland even more vulnerable to the threat of tariffs or if Trump does implement changes to the tax code."

Irish leaders are preparing to host the White House celebrations against a backdrop of heightened trade sensitivities, balancing economic ties with the U.S. against protectionist pressures.

Conclusion

This episode of WSJ What’s News provides a comprehensive analysis of President Trump's renewed tariffs on steel and aluminum, exploring the immediate and long-term effects on both domestic industries and the global metals market. Through expert insights and current geopolitical developments, Vargas paints a nuanced picture of the intricate web of trade relations and economic policies shaping the U.S. and the world. The episode underscores the interconnectedness of trade decisions, political strategies, and economic outcomes, offering listeners a detailed understanding of the factors at play.

Notable Quotes:

• Nicole Vogt ([02:10]): "Short term the US will most likely be impacted because you cannot change that quickly your production set up than to produce everything locally."

• Nicole Vogt ([05:10]): "All downstream, steel intensive, good manufacturers, small medium enterprises... your prices go up and this means you are affected by the increased prices."

• Political Analyst ([11:17]): "This can be seen as a setback for President Trump... the winning party is centre right... strengthens Greenlandic economy before a secession from Denmark."

• Seth Carpenter ([07:53]): "Inflation is the change in prices, it's not the level of prices... Fed is going to be thinking about inflation and asking, okay, with all the available information, does it look like the trend is down?"

• Chelsea Delaney ([12:00]): "Ireland had this huge economic explosion... driven in large part by American companies... makes Ireland even more vulnerable to the threat of tariffs or if Trump does implement changes to the tax code."

This summary encapsulates the key discussions and insights from the episode, providing a detailed overview for listeners unfamiliar with the original content.