The Trump administration is reportedly planning to adjust steel and aluminum tariffs, with a uniform tax rate of 25% on finished steel and aluminum products, which is said to potentially increase the costs of imported goods.

Why was the AI policy adjustment announced before the midterm elections?

Recent reports indicate that the Trump administration is planning significant changes to the steel and aluminum tariff system, which will uniformly impose a 25% tariff on “derivative products” containing steel and aluminum, replacing the current complex and calculation-intensive tariff method. This policy adjustment is seen as an effort by the U.S. government to maintain trade protection while easing compliance pressures for businesses, but it may also trigger new impacts on global trade relations and supply chains.

On Wednesday, April 1, Eastern Time, U.S. media citing informed sources reported that the new steel and aluminum tariff policy could be announced as early as this week. The new policy will stipulate that all finished products made with imported steel and aluminum will be subject to a 25% tariff. Currently, companies are required to calculate the tax burden based on the steel and aluminum content in their products, with the highest applicable tariff rate reaching 50%.

Following the news, sentiment in the industrial metals and manufacturing sectors showed divergence. The U.S. Aluminum (AA) stock, which closed up 8.6% on Wednesday, fell after hours, dropping about 2% in after-hours trading.

Overall, this tariff adjustment appears more like a “technical optimization” of existing trade protection policies rather than a fundamental shift. The U.S. still aims to protect domestic industries through tariffs but is beginning to transition toward a framework that is “more operational and more certain” in implementation.

However, in the context of tightening global trade environments and escalating geopolitical tensions, even “simplified rules” adjustments could trigger chain reactions across supply chains and diplomatic relations. The specific implementation details after the policy takes effect, as well as responses from various countries, will be key points of market attention.

“Simplification” of Tariff Structure: From Complex Valuation to Uniform Rate

The core of the steel and aluminum tariff adjustment reported this Wednesday is to shift from the existing “tariff based on content” complex system to a more straightforward uniform rate.

Under current rules, when the U.S. imposes tariffs on certain steel and aluminum products, companies must precisely calculate the metal content and pay tariffs that can reach up to 50%. This system has been widely criticized for increasing compliance costs and complicating supply chain management.

The new plan proposes to adopt a “finished product tariff” approach, directly imposing a 25% tariff on all relevant derivative products. Analysts believe this change has two implications:

• Reducing compliance costs: Companies no longer need to break down material sources or ratios.
• Enhancing policy enforceability: Reduces declaration disputes and regulatory difficulties.

However, it is worth noting that for products that are “almost entirely made of steel or aluminum,” the higher existing tariffs may still be retained.

Policy Intent: Seeking a Balance Between Protection and Economic Pressure

The Trump administration previously imposed high tariffs on steel and aluminum products mainly to address the so-called global overcapacity, especially targeting steel exports from Asian countries. But the spillover effects of the policy have been significant—including allies such as Canada, the European Union, Mexico, and South Korea have also been impacted.

This adjustment, to some extent, reflects the real pressures faced by policymakers. At the business level, U.S. manufacturers have long complained about complex tariff rules and rising costs. Politically, inflation and rising living costs are eroding voter support.

Media reports suggest that with midterm elections approaching, economic issues have become a key variable, and the government intends to alleviate dissatisfaction among businesses and consumers by optimizing policy details.

Market and Supply Chain Impact: Uncertainty Remains High

Although the tariff rate has been reduced from a maximum of 50% (based on content) to a uniform 25%, analysts believe this does not necessarily mean a substantial weakening of trade protection.

On one hand, for companies that previously found it difficult to accurately calculate metal content, the tax burden might become more certain or even higher; on the other hand, the unified tariff could expand its scope, bringing more products into the tariff system.

Potential impacts include:

• Reshaping global supply chains: Companies may accelerate adjustments in procurement and production layouts.
• Risks of escalating trade frictions: Allies may express dissatisfaction or retaliate against the new measures.
• Increased metal price volatility: Markets may reprice demand and cost expectations.