US President Donald Trump’s implementation of a 25% tariff on imported steel has revived a trade war from his first term, but experts say it is not enough to revive the struggling American steel industry. Decades of disinvestment and poor trade policies have led to stagnation in the industry, which now faces grave threats as China floods the global market with artificially cheap steel.
The US steel industry must modernize to survive, and targeted tariffs can help protect it from excessive overcapacity and unfair price manipulation by foreign competitors. However, relying solely on tariffs is an unsteady foundation for industrial policy. The European Union has already implemented a carbon-border adjustment mechanism, which considers carbon emissions in the production of steel.
Strategic tariffs can also support the industry’s transition to clean technologies. Revenue from these tariffs could help fund investments and incentives that promote modernization. For example, investment tax credits for revamping facilities to use clean technologies and production tax credits for making domestic clean steel would spur private investment.
The federal government can combine fortified trade policies with structural support for the steel industry’s transformation. This could include expanding “Buy America” requirements and reviving “Buy Clean” standards for steel used in federal projects. These measures can strengthen demand for US-produced steel and accelerate modernization.
Unless President Trump expands his strategy to include incentives and investment, his approach will be unstable. The game of tariffs alone is precarious, and the industry’s fate hangs in the balance. Mike Williams, a senior fellow at the Center for American Progress, warns that relying solely on tariffs will lead to unintended consequences, including widespread economic risks and decreased competitiveness globally.
Source: https://www.theguardian.com/commentisfree/2025/feb/22/trump-steel-tariffs