**Washington**: The recent 25% tariffs on aluminium and steel by the US government are expected to strain the defence industrial base, impacting major military projects and prompting retaliatory measures from allies like Canada and the EU, according to analysts from the Center for Strategic and International Studies (CSIS).
The imposition of a 25% universal tariff on aluminium and steel by the US government, as part of President Donald Trump’s ‘America First’ agenda, is poised to strain the US defence industrial base in the medium to long term. The tariffs, which became effective recently, are expected to impact the production of key military assets, including F-35 aircraft, destroyers and aircraft carriers, as highlighted by defence analysts from the Washington-based Center for Strategic and International Studies (CSIS) in an interview with Airforce Technology.
In the wake of the tariffs, US allies have responded with their own retaliatory measures. Canada has enacted tariffs on nearly C$29 billion (approximately $20.6 billion) worth of American imports, effective as of 12 March, while the European Union plans to impose tariffs amounting to €26 billion (around $28 billion) starting in April. The situation has resulted in a complex trade dynamic, with implications for both the US and its allies.
Analysts attribute a significant decline in US steel exports—down by 9.2% since 2015—to these protectionist policies. The top three markets for US steel exports remain Canada, Mexico, and the Dominican Republic. The inability to export effectively is expected to raise production costs further, impacting various military contracts and projects.
US Secretary of State Marco Rubio defended the tariff policy, stating, “If you don’t have steel and aluminum you can’t build warships, you can’t build airplanes, and you are not an industrial economy.” Rubio suggested that the tariffs were necessary to promote domestic industrial capabilities and protect national security in the long term.
Cynthia Cook, a senior fellow at CSIS, articulated the detrimental impact of these tariffs on defence contracts. She explained that increased tariffs on materials sourced from Canada, which is integral to US defence production, will lead to higher costs for both the US government and contractors. “Even for ‘cost-plus’ projects, where if it is notionally a pass-through, there are transaction costs that will increase the costs to the USG and the US taxpayer,” Cook said.
Furthermore, she noted that fixed-price contracts might place a financial burden on contractors unable to pass increased costs onto government customers, thus potentially reducing their profits.
Mark Cancian, another senior fellow at CSIS, expressed concern regarding the ramifications of these economic confrontations, stating that while there may not be immediate effects on military capabilities, the ongoing trade war could weaken Western coalitions against rivals like Russia and China. “The fact that the United States and its allies are having bitter economic confrontations helps both Russia and China,” he remarked.
As the US delivery of F-35 aircraft to the Polish Air Force is anticipated in April 2024, the broader implications of the tariff measures continue to unfold, not only affecting production timelines but also the interconnectedness of international defence partnerships.
Source: Noah Wire Services
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