Trump escalates trade war with 25% tariffs on steel and aluminum, Canada to be hardest hit

San José, CA – On Monday, February 10, President Trump signed an executive order raising tariffs, or taxes on imports, to 25% on steel and aluminum. The tariffs are to start on March 4. While his first round of tariffs on Canada, Mexico and China was based on a “national emergency” of refugees and drugs coming into the country, the latest tariff order used a “national security” rationale. They are seen as less likely to be suspended as the first round was.

Trump says that these tariffs will create jobs and expand manufacturing, but in fact they raise prices and cause overall job losses in manufacturing. With the American people already reeling from egg shortages and record prices, Trump’s tariffs are just going to raise prices even more for everything made from steel and aluminum in the United States, from cars to appliances to construction material to soda cans. This will lead to higher prices and/or more imports of these items. More workers are employed in industries that use steel and aluminum than in industries actually making steel; so as the price of raw materials goes up, the overall number of jobs in manufacturing will go down.

The country hardest hit by Trump’s tariffs will be Canada, which provides more aluminum to the United States than all other countries combined. Exports to the United States are also 75% of Canada’s total aluminum production, so the Canadian industry will be hit hard by the growing trade war. Both the ruling party and the opposition parties have called for a strong response to Trump’s tariffs. Mass anger at the United States, as seen as Canadian hockey fans booing when the U.S. national anthem is played, has also been stoked by Trump’s call for Canada to become part of the United States, and referring to the Canadian Prime Minister as “governor.”

The main reason why Canada is such a powerhouse in producing aluminum as compared to the United States is because of lower electricity costs – about one-third less than the cost of producing electricity in the United States. Aluminum production is super energy intensive – U.S. production of aluminum uses about 5% of all the electricity in the United States, even though we are a relatively small producer (#12 in the world, with about 1% of world production). Canada benefits from cheap hydropower. On the other hand, Trump is trying to scale back solar and wind in the United States, which are the cheapest ways to generate electricity.

Trump’s tariffs are in fact an admission that many U.S. corporations cannot compete in the world market and is an attempt to restrict imports into the United States. But this will only isolate the United States further. While the Biden administration’s support for the Israeli genocide in Gaza isolated the United States politically, Trump’s tariffs and trade war will further isolate the United States economically. His policies are only going to accelerate the decline of U.S. power.

Trump’s economic policies, like his pro-imperial, anti-immigrant and anti-diversity drives, is an attempt to turn back the clock more than 100 years, to the presidency of William McKinley, when basic manufacturing of coal and steel were important for economic power. But an economy based on 19th century technology cannot compete in the 21st century.

China’s rise is not based on looking backward 1000 years to when China was the world’s greatest power with the most advanced technology. Rather, China laid the foundations with the expansion of education and bringing women into the labor force following the revolution in 1949, in contrast to Trump’s plan to end the Federal Department of Education and his drive to hold women back.

China’s current “made in China 2025” targets higher tech industries such as electric batteries, electric cars, high-speed rail, robotics, solar and wind power, shipping, AI, the internet, aerospace and medicines. China is progressing on all those fronts. It is becoming a world leader in the areas of solar power, electric vehicles, high-speed rail and shipping; vying for leadership in space and artificial intelligence; and making gains in areas such as pharmaceuticals and chip production, where they are still behind. More and more, China’s advance is showing the superiority of a socialist system to the U.S. monopoly capitalism.

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