"We are on the losing side of almost all trade deals," Trump tweeted on Monday. "Our friends and enemies have taken advantage of the US for many years. Our Steel and Aluminum (sic) industries are dead. Sorry, it's time for a change! MAKE AMERICA GREAT AGAIN!"
Earlier, Trump dismissed a threat by the European Union to impose retaliatory tariffs on US products including Harley-Davidson motorcycles, bourbon and Levi's jeans, saying the US would simply apply a tariff on European cars.
Commerce Secretary Wilbur Ross, meanwhile, called the US$3 billion ($4.1b) in affected goods a "pretty trivial" amount. Peter Navarro, director of the White House National Trade Council, has argued the 10 per cent aluminium tariff would add about one cent to a sixpack of beer and US$45 to a car.
"This whole idea that there's a big downstream effect — it's just part of the fake news that's going to be put out to oppose these tariffs," Navarro told Fox News last week. "A penny for a sixpack of beer — that's worth it to put Americans back to work in two industries that we need."
The Wall Street Journal pointed out in an editorial that steel makers employ about 140,000 people in the US, while steel-using industries employ 6.5 million.
In a note on Monday, Saxo Bank chief economist Steen Jakobsen described Navarro as the "single biggest risk to growth this cycle", warning the probability of a US recession over the next 12 months had soared to 70 per cent.
"In my 30-plus years of trading and economics I have never seen more incorrect assumptions and premises than the ones presented by the US administration on trade," Jakobsen said.
"Tariffs will increase prices for US consumers — effectively it's a tax on consumption. Something like 40 per cent of all goods sold at Walmart are China or Asia produced."
AMP Capital chief economist Shane Oliver said it was too early to predict the impact on Australian consumers, but the worst-case scenario was a full-blown trade war resulting in higher prices, a shrinking global economy and massive job losses.
"If we go down that path it will mean higher prices for imported consumer goods — cars, washing machines, electronics, clothing — but it really depends on how other countries respond and how far President Trump goes with his protectionist policies," he said.
"The last 30-odd years we've been reducing tariffs as a result of domestic policies and free-trade agreements, and that's been a boon for Australian consumers, greater access to goods from around the world at lower prices. So the worst-case scenario is losing that."
Oliver said that we were a "long, long way from that". He pointed out that the US did impose steel tariffs of 8-30 per cent in 2002 "yet there wasn't much impact from that", although a review did find that the "costs outweighed [the] benefits".
He added that the effect of increased prices for US-manufactured products — imported beer, for example — would likely be negligible. "It could [be passed on] but I think it will be lost in the wash," he said. "One-cent is a very small increase, it's questionable whether the Australian importer would be able to pass it on."
