(Oliver Sved | Dreamstime)

By Erin Banco | NJ Advance Media for NJ.com

President Trump announced new tariffs for steel and aluminum imports and on Friday, via a tweet, welcomed the possibility of a trade war.

As a result of Thursday's announcement and the president's subsequent tweets, stocks fell and economists questioned whether the tariffs would in fact positively impact American jobs.

The Trump administration has said the tariffs will improve the steel and aluminum industries domestically. But critics say the tariffs could increase costs for consumers of a wide range of products and decrease the number of jobs in states that employ people in sectors that rely on steel and aluminum imports to make their products.

Experts have so far only focused on the impacts of the steel tariff. Less has been said about the impact on the aluminum industry.

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The tariffs

President Trump plans to impose tariffs of 25 percent on steel and 10 percent on aluminum, which means that there will now be a tax on almost every foreign shipment consisting of those materials coming into the U.S., economists say.

Companies that rely on steel and aluminum imports have for months pushed back against the administration's desire to impose the tariffs, claiming it would not only hurt their businesses but would strain relationships with trade partners.

The announcement comes on the heels of a Commerce Department investigation that said imported metal, such as steel and aluminum, posed a threat to national security because it negatively impacted the domestic steel and aluminum industries.

Canada, the European Union, Mexico, Brazil and China all said they would consider retaliatory measures to the tariffs.

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Threats of trade war

On Friday morning, President Trump tweeted that a trade war would be a welcome development. It sent the market into a frenzy.

When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy! — Donald J. Trump (@realDonaldTrump) March 2, 2018

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Stocks fell Thursday and Friday after President Trump's announcement. (Daniel Acker | Bloomberg)

Stocks fall

Stocks fell again on Friday in response to the tariff announcement and President Trump's trade war tweet.

On Thursday, the Dow Jones industrial average closed 420.22 points lower at 24,608.98 after rising more than 150 points earlier in the day. The S&P 500 also fell Thursday. It declined 1.4 percent, erasing its year-to-date gains. On Friday, the Dow fell 70.92 points.

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How Trump thinks tariffs will help the U.S. economy

The Trump administration insists the tariffs will improve steel and aluminum industries domestically.

We must protect our country and our workers. Our steel industry is in bad shape. IF YOU DON’T HAVE STEEL, YOU DON’T HAVE A COUNTRY! — Donald J. Trump (@realDonaldTrump) March 2, 2018

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But what is he missing?

Economic experts say the steel tariffs specifically would not protect American jobs and would increase costs for consumers.

The number of people in the U.S. that are employed in steel-consuming sectors (ie: the sectors that make things like cars and planes) is much higher than the number of people employed in the steel industry, according to The Economist and the U.S. Bureau of Labor Statistics.

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Many more Americans work in steel-intensive industries than directly in steel production https://t.co/KYF16D53RU pic.twitter.com/eOB4JhdOhT — The Economist (@TheEconomist) March 2, 2018

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Steel-consuming companies could have to lay people off as a result of the new tariffs, experts say. (Jim Wright | The Star Ledger for NJ.com)

So, how will jobs be impacted?

If there are higher prices for steel and aluminum materials used for development of products, then that will result in higher prices for those products and consumers would most likely buy less and as a result jobs could decline, said Mark Muro, a senior fellow and policy director at the Brookings Institution's Metropolitan Program. Brookings is a think-tank based in Washington.

"This is going to impact these businesses competitiveness," he said.

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How N.J. stacks up

Steel is so widely used, including in the construction industry, that the tariffs will virtually affect every state, Muro said.

The tariff proposals while not directly targeting Northeast states will negatively impact their economies, said Tom Prusa, a professor at Rutgers University specializing in international trade.

New Jersey employs tens of thousands of people in industries that use steel to make their products, according to the U.S. Bureau of Labor Statistics.

"Downstream industries are going to be adversely affected by this," Prusa said. "Our local industries are going to basically face a 25 percent cost increase overnight."

The concern for the New Jersey, New York region are the affects of cost increases to supply chains of much larger industries, Muro said.

"There are going to be cost increases handed on to consumers," he said.

The state's Department of Labor and Workforce Development declined to comment.

Even states that are big steel and aluminum producers are likely to be negatively impacted, for the same reasons as the Northeast. Those states include Texas, Ohio, Michigan and Wisconsin.

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When will tariffs be implemented?

It is still unclear when the tariffs will go into effect.

Muro and Prusa say there is still some discussion around whether or not Trump will make exceptions for countries such as Canada.

Muro said some analysts are saying the tariffs might not last long or could be delayed if major companies like Boeing and Caterpillar make enough noise.

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Countermeasures by foreign trading partners could impact exports. (Mark Dye | The Star Ledger for NJ.com)

Other ramifications

The ramifications of the tariffs could be even larger, and deeper than expected, Muro said, because far more people work in enterprises that are users of steel and aluminum inputs than the steel and aluminum industries themselves.

It is still unclear if and how other countries will implement countermeasures as a reaction to the tariffs. But Prusa said those measures will likely target exports. (New Jersey is an exporter of things like petrol and aircraft engines and parts).

"Whenever there is uncertainty in the trade sector, exports are almost always impacted," Muro said.

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More on the N.J. economy:

N.J.'s unemployment rate just spiked, departing from rest of country

Why is Newark keeping details of Amazon's $7B bid secret?

Phil Murphy vows to 'think and act big' to improve N.J. economy

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Erin Banco may be reached at ebanco@njadvancemedia.com. Follow her on Twitter @ErinBanco. Find NJ.com on Facebook.