Is a global trade war about to escalate? Trump wants to double steel and aluminum tariffs to 50%

According to Zhitong Finance APP, U.S. President Donald Trump stated on Friday local time during a visit to a U.S. Steel Corp. factory that is set to be acquired by Japanese steel giant Nippon Steel Corp. that he plans to significantly increase tariffs on steel and aluminum from the previously established and effective rate of 25% to 50%, claiming that this move will help protect American workers.

Trump visited the factory near Pittsburgh on Friday to promote the anticipated major acquisition between U.S. Steel and Nippon Steel, asserting that the deal will ensure that this iconic American company remains owned and operated by Americans, although many details of the acquisition agreement remain unclear. He stated that raising steel tariffs will benefit the U.S. operations of the new joint venture.

It is reported that the Trump administration is making final arrangements to approve Nippon Steel's plan to acquire U.S. Steel as a wholly-owned subsidiary. Sources revealed that to ensure a certain level of intervention and influence by the U.S. government over U.S. Steel's operations, Nippon Steel will sign a "national security agreement" with the U.S. government.

"I believe everyone who just made this investment decision in America is very happy right now because it means no one can steal your industry anymore," Trump said. "When the tariff was at 25%, they could barely get over that barrier; if it goes to 50%, they won't be able to get over it at all."

During this event, Trump announced an increase in tariffs on imported steel products and later posted on his Truth Social platform that he would also raise tariffs on aluminum products. The post stated that the new tax rates are expected to take effect on "Wednesday, June 4."

Is the Era of 50% Tariffs on Steel and Aluminum Coming?

Trump's statement about further increasing tariffs on steel and aluminum marks the end of a week of turbulent tariff policies and indicates that the global trade war has not eased and may become even more intense. Previously, the Trump administration's broad "reciprocal tariffs" were ruled illegal by U.S. trade courts, but the appeals court subsequently issued a stay order, temporarily maintaining these tariff measures by the Trump administration. However, informed sources indicated that the Trump administration has prepared a so-called "plan B" to prevent further judicial intervention in tariff policies, striving for enough leeway to continue implementing global tariff policies.

The new 50% tax rate also supports Trump's commitment to the U.S. Steel-Nippon Steel acquisition deal. This deal—against which he had opposed during his campaign—is now seen as beneficial for steelworkers in the key swing state of Pennsylvania. The United Steelworkers union had opposed the deal, fearing that Japanese ownership could lead to capacity reductions and job relocations to other plants, but Trump assured workers that America would still hold ownership and emphasized that the collaboration between Nippon Steel and U.S. Steel would create job opportunities and economic benefits, with no reduction in U.S. steel capacity for a period and no relocation of production facilities overseas.

"There will be a lot of funding flowing to you," Trump added. He spoke in front of a banner that read "Golden Era," "U.S. Steel," and "American Jobs," reiterating that his policies would bring economic prosperity Benefiting from Trump's desire to further increase tariffs on steel and aluminum, shares of American steel companies such as Nucor Corp., Cleveland-Cliffs Inc., and Steel Dynamics Inc. surged significantly in after-hours trading. Cleveland-Cliffs' stock rose over 15%, while Steel Dynamics and Nucor both increased by at least 5%.

Trump stated that workers at U.S. Steel would soon receive a $5,000 bonus and mentioned that $2.2 billion of the proposed $14 billion acquisition investment would be used to increase production at the Mon Valley Works steel plant, where he delivered his speech. Trump indicated that $7 billion would be allocated for modernizing steel mills, expanding ore mining, and building new facilities in Indiana, Minnesota, Alabama, and Arkansas.

He also noted that U.S. Steel would not announce layoffs or outsourcing immediately upon acquisition, and its blast furnaces would operate at "full capacity" for at least the next 10 years.

According to statistics from Morgan Stanley, about 17% of U.S. steel demand relies on imports, primarily from Canada, Brazil, and Mexico. Construction companies have warned that tariffs could raise costs for key building materials, reduce supply scale, and increase expenses for new home construction.

The event had a "victory parade" atmosphere, with Trump receiving a Pittsburgh Steelers jersey and a gold hard hat during his visit. Despite the lively atmosphere, key details of the transaction remained unclear before Friday's event. Investors were generally eager to learn about the specifics of the agreement following his announcement last week approving the acquisition.

Trump's Attitude Towards Nippon Steel's Acquisition of U.S. Steel Takes a Dramatic Turn

Trump's decision marks a stunning reversal of his previous stance; he had strongly opposed the deal during his campaign, but he attributed this change to concessions made by Nippon Steel that would benefit American steelworkers.

"Every time they come in, the deal gets better for the workers," Trump stated, emphasizing that U.S. Steel's headquarters would remain in Pittsburgh.

Last week, Trump described the deal as "a planned partnership" that would bring investment to the U.S. rather than a complete sale of an American company. Following Trump's announcement last week, both parties continued to negotiate specific terms, including what veto rights the U.S. government would retain on the U.S. Steel board. "In Washington, I will oversee this entire process; this deal will be fantastic," Trump said.

Friday's event marked a significant milestone in the long and controversial journey of Nippon Steel's acquisition of this iconic American heavy industry company. Nippon Steel initially proposed to acquire U.S. Steel for $14.1 billion, and based on the current attitude of the Trump administration, the scale of the acquisition is unlikely to change significantly.

"Commitments have been made," said Pennsylvania Republican Congressman Dan Meuser in an interview at the Irvin plant before Trump's speech. "They won't kill this deal," he added, stating that it was "almost a done deal." The transaction proposal submitted to the Committee on Foreign Investment in the United States (Cfius) includes an initial acquisition price of $55 per share and additional investments, according to informed sources.

Informed sources stated that under the agreement, the U.S. government will retain certain powers, including decision-making authority over board members. Pennsylvania Republican Senator David McCormick referred to the arrangement as a "golden share," and it is currently unclear whether this implies equity or merely grants the government some form of intervention rights.

McCormick stated in an interview with CNBC that the structure will ensure "an American CEO, a majority of American board members, and a golden share, fundamentally requiring U.S. government approval for several board members, thereby ensuring that production cuts do not occur."

Both Trump and former President Joe Biden opposed this transaction during the 2024 presidential election, arguing that U.S. Steel should remain in American hands. Biden vetoed the deal on national security grounds, after which Trump ordered a re-examination of the decision and announced a partnership last week.

Advocates supporting the acquisition deal between Nippon Steel and U.S. Steel have long argued that the Japanese company will help revitalize this traditional American enterprise through investment.

The next steps to complete the transaction are not entirely clear. Both parties need to finalize the agreement through the Cfius review process. It is currently unclear whether any text of "mitigation agreements" has been finalized—such agreements may stipulate what powers the U.S. government retains.

The acquisition initiated by Nippon Steel is viewed by some Republican lawmakers as a "rescue" operation for the U.S. steel industry, aiming to inject funds and advanced electric arc furnace technology to help the U.S. steel industry gain new vitality in future market competition