Pafos Live 4 June 2025
By Chr. Christodoulou-Volos, Associate Professor of Economics and Finance, Neapolis University, Paphos
On May 30, U.S. President Donald Trump announced his intention to double tariffs on imported steel to 50%, a sharp escalation in his administration's trade protectionist agenda. Speaking to workers at a U.S. Steel plant in Pennsylvania, Trump described the move as a necessary step to "guarantee the safety of the steel industry in the United States," receiving loud cheers and shouts of "U.S.A., U.S.A.!" from the public. But while the announcement may have been popular at the factory, it has raised alarm among economists, trading partners and international markets, who warn that it risks deepening the global trade war, driving up costs for U.S. industries and straining diplomatic relations.
The U.S. has already imposed 25 percent tariffs on imported steel since 2018, a measure Trump justified under Section 232 of the Trade Expansion Act, citing national security concerns. This move was met with direct retaliation from key trading partners such as the European Union, China, Canada and Mexico, which imposed tariffs on American products. Many experts saw the tariffs not as a real defense of national security, but as part of a broader "America First" strategy aimed at reforming global trade rules in favour of the U.S.
Now, with the proposed increase to 50 percent, Trump is risking whether tighter protections will revive domestic steel production and jobs without provoking even harsher retaliation. But the reality is much more complex.
Winners and losers in the USA
While U.S. steelmakers and their workers may benefit from less foreign competition, the rest of the U.S. economy could suffer. Higher steel prices directly affect a wide range of U.S. industries, from construction and automotive to energy and infrastructure, which rely on affordable steel inputs. For every steel worker whose job is protected, several other workers may face layoffs as their employers struggle with rising costs and shrinking profit margins.
What's more, Americans will eventually pay the price through higher prices on everything from cars to appliances. Previous research into Trump's tariffs estimates that U.S. companies and consumers bear the burden of
A greater part of the financial burden, not foreign producers. Critics argue that the tariffs are, in essence, taxes for domestic buyers.
Global impact
Internationally, Trump's tariff hike threatens to intensify trade tensions with key allies and trading partners. The EU has already signalled that it will consider further countermeasures, warning that an escalating confrontation could seriously damage global supply chains and growth. China, which is in a protracted trade standoff with Washington, may also respond with new measures, intensifying the uncertainty that clouds international markets.
The World Trade Organization has been largely sidelined in these disputes, as the Trump administration has repeatedly challenged its authority and blocked the appointment of new judges to its appeals body. This undermines the rules-based global trading system that has governed international trade for decades, increasing the risk of chaotic, unilateral actions.
Strategic risks
While Trump presents his tariffs on steel as a matter of national security, many analysts question whether imported steel really poses a threat. Much of the foreign steel the U.S. imports comes from close allies such as Canada, South Korea and the EU. In addition, U.S. steel production, although under pressure, remains competitive in several high-quality and specialty segments that are less affected by low-cost imports.
Relying heavily on risky tariff instruments, the Trump administration risks alienating allies, weakening multilateral cooperation, and creating economic distortions that may ultimately harm the very industries it seeks to protect. A more strategic approach may include targeted support for innovation, workforce development and fair competition, rather than sweeping tariffs that provoke retaliation.
Inference
Trump's proposed increase in steel tariffs to 50 percent represents a bold but dangerous escalation of his protectionist policies. While the move may have political resonance with some groups of workers and enhance the short-term benefits for U.S. steelmakers, it entails significant costs: higher prices for U.S. industries and consumers, increased global trade tensions, and a possible long-term deterioration of America in the international economic order.
As the global trade war deepens, the question is not only whether the U.S. steel industry can protect itself from foreign competition, but whether the broader U.S. economy and its complex network of international relations can withstand the growing pressure.
