Traders on Kalshi are actively speculating on the impending implementation of steel and aluminum tariffs, set to take effect on March 12, 2025.
The Trump administration announced the reinstatement of these tariffs, aiming to bolster domestic manufacturing, while businesses express concerns over potential cost increases.
President Donald Trump signed proclamations on Feb. 10, 2025, imposing a 25% tariff on steel and aluminum imports from all countries. This removes prior exemptions and raises the aluminum tariff from its previous 10% rate. The administration cites national security concerns and the need to protect domestic industries as primary reasons for this decision.
What prediction markets are saying
On Kalshi, traders are pricing in a high probability of the tariffs being fully implemented. As of today, the contract forecasting that the tariffs will take effect before April 1 is trading around 85 cents, implying an 85% likelihood that they will go into effect as scheduled — but leaving open the possibility for further delays.
Market analysts note that recent White House statements and limited diplomatic progress suggest little room for a reversal. However, some traders remain cautious, anticipating a possible legal challenge or temporary delay due to international pressure.
Case for 'Yes'
- Political Commitment – The administration has made trade protectionism a cornerstone of its economic policy. Trump has previously followed through on similar tariff measures, despite industry pushback.
- Limited Diplomatic Leverage – While Canada, Mexico, and the EU have criticized the move, negotiations for exemptions have made little progress. Without strong retaliation threats, the U.S. is unlikely to reverse course.
- Support from Domestic Industries – The American Iron and Steel Institute and other industry groups are backing the tariffs, arguing they will level the playing field for domestic manufacturers.
- Regulatory Pathway Already in Place – The legal framework for the tariffs has been established under Section 232 of the Trade Expansion Act, making it easier to implement without congressional approval.
Case for 'No'
- Legal and Political Challenges – Trade groups and manufacturing organizations may challenge the tariffs in court, arguing that they harm U.S. businesses and violate previous trade agreements.
- Economic Fallout Could Force Reversal – The National Association of Manufacturers warns that price hikes could lead to job losses, particularly in automotive and construction sectors. Rising costs for manufacturers may force the administration to reconsider.
- International Retaliation – The European Union and other key trade partners have hinted at retaliatory measures, which could escalate into a broader trade war. If tensions rise significantly, the administration may pause or renegotiate the tariffs.
- Market Volatility and Investor Backlash – Investors and businesses are preparing for supply chain disruptions and market instability. A sharp market reaction or negative economic indicators before March could pressure the administration to soften its stance.
