“America First” on Steroids — 50% Tariffs Now Hit 407 Steel and Aluminum Products, But Who Will Pay the Price?

TradingKey - On August 19 (local time), the U.S. Department of Commerce announced the expansion of its steel and aluminum tariffs to 407 new product categories, imposing a 50% tariff rate on items including wind turbines, mobile cranes, railway vehicles, furniture, compressors, and pumps — all of which contain steel or aluminum components. The measure took effect on August 18.

This move marks a significant escalation from taxing raw materials to broadly targeting downstream manufactured goods, dramatically widening the scope of industries affected. Markets reacted swiftly:

• U.S. equities declined, with the Nasdaq Composite dropping 1.46% and the S&P 500 falling 0.59%, led by tech sector losses.
• Chipmakers NVIDIA and AMD, highly dependent on global supply chains, both fell over 3%, as investors worried about rising production costs and potential retaliatory actions from trade partners.
• Global oil prices tumbled, with WTI crude briefly dropping below $67 per barrel, reflecting market concerns that escalating trade barriers could dampen global economic growth and energy demand.

By extending high tariffs to a broad range of industrial products, the Trump administration is doubling down on its “America First” trade agenda. However, the potential ripple effects — on supply chains, inflation, and investor confidence — are already showing up in financial markets.

Rising input costs are likely to be passed on to consumers. This risk is already evident: the U.S. Producer Price Index (PPI) for July showed accelerating price pressures at the wholesale level.

Trump’s trade policy has once again pushed into uncharted territory — stretching the red line of global trade norms. The new tariffs inject greater uncertainty into August’s economic data and come at a sensitive time, just ahead of the upcoming Federal Reserve FOMC meeting. With inflation risks resurfacing and trade tensions escalating, the Fed now faces a more complex backdrop in determining the path of interest rates.