US Unveils New Steel & Aluminum Tariffs
The U.S. administration has announced new tariffs on steel and aluminum, citing a rarely used provision of the Trade Act of 1974. While legal experts expect a Supreme Court challenge, manufacturers face immediate cost and supply chain disruptions. The move signals the administration will continue to pursue protectionist policies, keeping uncertainty high.
The legal authority for the tariffs, Section 232 of the Trade Expansion Act of 1962, allows the president to impose tariffs if imports are deemed a threat to national security. This provision was used in 2018 to levy 25% tariffs on steel and 10% on aluminum, which were later doubled to 50% in June 2025. The scope has also been expanded to include the steel and aluminum content of derivative products, from bulldozers to furniture. These actions are separate from Section 301 tariffs under the Trade Act of 1974, which target unfair trade practices and have been a primary tool in the trade war with China. While a recent Supreme Court ruling invalidated the use of the International Emergency Economic Powers Act (IEEPA) for a broad "Liberation Day" tariff, the Section 232 and 301 tariffs remain in place, creating a complex and layered trade environment. For manufacturers, the impact of sustained high tariffs goes beyond price hikes. Studies following the 2018 tariffs indicated that increased input costs were associated with 75,000 fewer jobs in the domestic manufacturing sector, far outweighing gains in steel production. The Minneapolis Fed has described the effect of tariffs and trade wars as being similar to an interest rate hike, reducing demand for capital and hitting the competitiveness of U.S. manufacturers in global markets. This trade policy shift is occurring amid a broader geopolitical realignment where supply chains are being "weaponized." Companies are moving beyond simple "China +1" diversification to a more tiered sourcing hierarchy that prioritizes geopolitical stability. This is compounded by increasing competition for critical minerals essential for EV and AI manufacturing, with China controlling roughly 95% of processed rare earth elements. Internal audit functions must now advise on a confluence of regulatory pressures beyond trade. OSHA has 2026 compliance deadlines for updated chemical hazard communication rules and is advancing a new federal standard for heat-illness prevention that will impact both indoor and outdoor work. The EPA is also implementing new reporting requirements for PFAS "forever chemicals" that will require extensive data collection from manufacturers. Finally, the SEC is increasing its focus on supply chain risk through new disclosure requirements. Rules adopted in 2023 mandate detailed annual disclosures on cybersecurity risk management and governance, explicitly including risks from third-party systems. Furthermore, new climate disclosure rules, though temporarily stayed, will require companies to report on material risks within their value chain, adding another layer of compliance for global manufacturing operations.
