50%! The doubling of tariffs on US steel and aluminum has triggered a chain reaction. Australian Prime Minister bluntly stated, "The US economy is self-harming."

Starting from June 4, 2025, the United States' measure to double the tariffs on imported steel and aluminum from 25% to 50% officially came into effect. This radical policy is like a huge rock thrown into the lake of the global economy, triggering layer upon layer of chain reactions. From Allies to rivals, from industry giants to ordinary consumers, all parties have been drawn into this economic maelstrom triggered by tariffs. Australian Prime Minister Albanese directly described this move as "self-harm of the US economy", while the turmoil in the global industrial chain has revealed the deep-seated crisis of trade protectionist policies.

I. Ally's Rage: The Rift in the Economic Alliance

As traditional Allies of the United States, the reactions of Canada, the European Union and Australia have been particularly intense. Marty Warren, the national director of the Canadian Steel Workers Union, warned that doubling tariffs would put "thousands of jobs at risk", while Bea Bruck, the president of the Canadian Labour Congress, stated directly that this move was "a direct attack on Canadian industry". The European Commission even explicitly stated in its declaration that it will implement countermeasures against the escalation of US tariffs, including imposing additional tariffs on US goods. If the two sides fail to reach an agreement, the countermeasures will come into effect as early as July 14th.

The statement made by Australian Prime Minister Albanese is more symbolic. He pointed out that doubling tariffs "would only increase the cost for American consumers", and emphasized that Australia would not impose retaliatory tariffs, but would continue to lobby the United States to waive tariffs on Australia. This stance not only reflects Australia's economic rationality but also exposes the fundamental differences in trade policies between the United States and Australia. Data shows that in 2024, Australia's steel and aluminum exports to the United States accounted for only 0.5% of its total exports, but the escalation of tariffs may undermine the prospects for cooperation between the two countries in the field of critical minerals.

Ii. Industry Turbulence: The "Butterfly Effect" of the Global Industrial Chain

The chain reaction of the US steel and aluminum tariffs has far exceeded expectations. Take the automotive industry as an example. The cost of steel accounts for 10% to 15% of the manufacturing cost of automobiles. A doubling of tariffs will directly push up production costs. Boston Consulting Group estimates that the 25% tariff that took effect in March alone has increased the import costs of steel and aluminum in the United States by 22 billion US dollars, and the costs of derivative products such as aircraft parts have increased by an additional 29 billion US dollars. If the tariff remains at 50%, the profit margins of American automakers will be further compressed, and some enterprises may accelerate the transfer of production lines overseas.

The construction industry is also facing cost pressure. William Opinger, the CEO of Alcoa, the largest aluminium producer in the United States, has warned that tariffs could lead to the loss of 100,000 American jobs, among which the aluminium industry will lose 20,000 jobs. This prediction echoes historical data: During the Sino-US trade war in 2018, for every new job added in the upstream of the US steel industry, multiple jobs were lost in the downstream, and the total number of jobs in the entire industry showed a net decrease.

The reorganization of the global supply chain is more covert. Chinese steel and aluminum products are often transported to the United States through countries such as Canada, Mexico and Vietnam to avoid high tariffs. In 2024, the increase in steel imports from Vietnam to the United States reached 143%, but Vietnam might merely be a transit point for re-export trade. After the tariffs doubled, Chinese enterprises had to seek new transshipment routes or adjust their supply chains, which further intensified the competitive pressure in the global market.

Iii. Policy Paradox: The "Opposite Direction" for Revitalizing Manufacturing

The Trump administration claimed that doubling tariffs was aimed at promoting the return of manufacturing to the United States, but the reality ran counter to the goal. The price of steel in the United States has risen by 16% since mid-January, while the cost pressure on downstream industries such as automobiles and construction continues to increase. Research by the Peterson Institute for International Economics shows that the number of workers employed in downstream industries such as automotive manufacturing and electrical machinery is ten times that of the steel and aluminum industries. Tariff policies have harmed the interests of more American enterprises and workers.

Ironically, the tariff policy has instead weakened the competitiveness of American enterprises. Take the aluminium industry as an example. Fields such as new energy vehicles and aerospace are highly sensitive to aluminium prices. Tax hikes may boost domestic aluminum enterprises in the short term, but in the long run, if they push up the costs of the industrial chain, they will instead affect demand. The share price of Alcoa dropped after the announcement of the tariff policy, which was a direct reaction of the market to this contradiction.

Iv. Historical Mirror: The "Poison" of Trade Protectionism

This is not the first time that the United States has "harmed itself" on the issue of tariffs. The Smoot-Hawley Tariff Act of 1930 triggered retaliatory tariffs worldwide, causing U.S. exports to plummet by more than 60%, factories to close down, farmers to go bankrupt, and the unemployment rate to soar, ultimately making the U.S. economy during the Great Depression even worse. Nowadays, the global supply chain is highly dependent, and the destructive power of tariffs has been further magnified. The U.S. consumer confidence index has declined and economic data has frequently shown "red lights". Former Treasury Secretary Summers has warned that the probability of a U.S. economic recession is approaching 50%, and "counterproductive economic policies" are an important reason.

The assertion of "economic self-harm" by the Prime Minister of Australia is not only a criticism of the policies of the United States, but also a warning to the global trading system. In the era of globalization, any unilateralist act may trigger a chain reaction and ultimately harm all participants. If the United States continues to use tariffs as a weapon, it will not only fail to achieve the revival of its manufacturing industry, but may also accelerate the isolation and decline of its own economy. This economic storm triggered by the 50% tariff might precisely be the most profound irony against trade protectionism.