For the last three decades, Donald Trump has ranted that America is getting stiffed on trade. But as president, he’s done little to back up his “America First” slogan—until now.

On Thursday (Mar. 1), the US president announced tariffs of 25% on imported steel and 10% on imported aluminum. The move is aimed at recouping the billions of dollars “lost” each year to other countries as the US imports more than it exports from countries like China and Mexico. Coming on the heels of tariffs on washing machines and solar panels, the new trade barriers may be just the start of a bigger effort to overhaul global trade. Trump is already threatening to slap tariffs on European cars. More ominously still, the president is boasting that his tariffs will ignite a trade war:

Trump’s tariff is good news for US steel and aluminum producers. A tax on imports makes the domestic equivalent relatively cheaper. But it’s bad news for anyone who consumes steel or aluminum, since it makes those metals more expensive. That’s just one of the ways that everyday Americans may lose out as a result of Trump’s proposed trade action, which poses a threat to the very people whose economic interests he claims to champion. And if he succeeds in launching his longed-for trade war, the entire global economy will suffer as a result.

Who pays the price?

While Trump’s announcement may hearten the country’s steel and aluminum producers, it’s bad news for the much bigger sector of the US economy that buys those metals to use them in the goods they produce.

Take steel, for instance, which is used to make cars, cans, trains, and planes. The pillars of American infrastructure are made of steel, from office buildings to bridges; so are the cranes, excavators, and other machines that build those things. Steel equipment extracts the oil and gas needed to produce all this stuff, and forms the pipes through which they flow. US steel-consuming manufacturers dwarf the US steel industry, with more than 6.5 million workers. (The steel industry, meanwhile, employs about 140,000 workers, says Moody’s.)

Facing higher prices for foreign steel under the Trump tariffs, steel consumers have three options. They can absorb the cost and fire workers. They can absorb the cost and lower their profit margin. Or they can pass on the cost to customers.

Most people are worried about the last option. That said, a 25% increase in the price of foreign steel, even if fully transferred to the consumer, probably won’t make everyday canned goods all that more expensive. A can of Campbell’s, a popular American soup brand, has 2.6 cents worth of steel. If the cost of that input rises by 25%, that adds an extra six-tenths of one cent onto the price of soup. Who wouldn’t be willing to pay that?

That’s the logic Wilbur Ross, the US secretary of commerce, is using to beseech the American people to please calm down. In a way, he’s right. The direct effect of the tax is most likely that prices will go up only marginally.

But Ross’ calculus ignores all the possible indirect effects of a tariff. For example, imagine American companies want to switch from using (now more expensive) foreign steel to US steel, which is the point of a tariff in the first place. Can the US steel industry handle the surge in demand? A trade sanction on steel from one of Trump’s predecessors offers some intriguing clues.

Case study: Bush steel tariffs

In 2002, the Bush Administration hastily slapped a tax on foreign steel, ranging from a 30% tariff on sheets to a 15% tariff on bars and rods. At the time, most steel-consuming manufacturers were small businesses, with less than 500 workers. They were what economists call “price takers”—companies too small to demand that customers pay more, for fear of losing out to the competition. These firms rushed to cancel foreign steel orders and buy up American steel.

By April, a month after the tax went into effect, some producers were rationing sheet steel to buyers because their main plants were near capacity and their rolling mills, booked full through June. The US steel industry went from running at 70% capacity to near 100% in just under two years, supplying over 90% of the market, when 80%- 85% was more standard. Ultimately, US steel producers couldn’t meet the demand (pdf).

The end result of all that demand-side pressure? Steel prices soared—spot prices for steel were up more than 60% four months later. A producer price index for steel and iron rose 11% over the next year; by the end of 2004, the index had climbed more than 60%.

In the brief time the Bush tariff was in effect, 200,000 Americans lost their jobs to higher steel prices, according to one analysis. The lost jobs represent about $4 billion in foregone wages. (At the time, only 187,500 workers were employed in the steel industry.)

Inflation… or deflation?

Nowadays US steelmakers supply only two-thirds of what US businesses demand. If US steel consumers were to switch to buying exclusively American, the industry would have to serve 26.9 million metric tons of extra steel a year to keep pace with foreign imports from 2017. America’s steelmakers now sit at about 75% capacity, so the industry has less space to expand than it did in 2002. Much of imported steel is also in the form of products that US factories aren’t equipped to make. American producers will need to adapt production to different grades of steel.

These investments are part of why Campbell’s, for example, suspects its soups will get more expensive. “Any new broad-based tariffs on imported tin plate steel—an insufficient amount of which is produced in the US—will result in higher prices,” said a Campbell’s spokesperson.

If Campbell’s is right—and if other products suffer the same fate—there’s a risk that consumer prices will start to rise. Right now, any sign of inflation appears to be bad for markets. It fuels fears that central banks around the globe will raise rates faster, heralding the end of the easy-money environment that’s fueled the economy in the past few years.

The impact of rising prices could wind up hurting other producers—even ones that don’t use steel or aluminum at all—as the effects eat into household spending. The additional money US consumers will have to shell out to buy American cans and other goods will eat into their spending on other goods, domestic and imported alike.

Then again, without more details of what Trump’s proposing, it’s hard to know how prices will behave. In fact, the tariffs could actually lower prices of imports that use steel, particularly in big, competitive markets like cars. Steel made by Canada, Brazil, and South Korea—the US’s top import sources for steel—that used to be bought by America will have to go somewhere. To offload this extra steel, they’ll likely slash prices. Imagine BMW, a German carmaker, decides to import (now cheaper!) steel from Canada. Suddenly, foreign carmakers can sell their vehicles in international markets at lower prices than their American competitors. Ford, the US’s third-biggest automaker, is already struggling with high commodity costs. Now, to keep up with foreign carmakers, Ford will either have to slash prices or bleed on its margins.

Looking longer term, it’s easy to see how Trump’s tariffs could backfire on his goal of reviving America’s steel and aluminum makers. Since the subsidies discourage steel and aluminum makers from investing in productivity-boosting technology, the move is liable to make them less competitive in the future. Meanwhile, foreign producers will be spurred to invest in labor-saving technology that will eventually allow them to undercut subsidy-coddled US steel and aluminum makers. That will destroy wealth as US companies are forced to lay off workers and shutter factories—leaving America’s struggling industrial base ultimately worse off.

Bad as that would be, there’s a much bigger risk to consider: The possibility of a trade war.

Trump’s trade war

On their own, the steel and aluminum tariffs are unlikely to dent global trade much. But if US trade barriers set off a chain reaction of nationalistic protections, the consequences could be dire. “A potential wave of tit-for-tat policies would accelerate the apparent pick-up in protectionist impulses in some economies that has been seen over recent years,” writes Ben May, director of global macro research for Oxford Economics, in a note.

What’s particularly worrisome is the breadth of Trump’s trade action. The US would likely be justified in levying anti-dumping measures against China. Chinese government subsidies have allowed its companies to sell steel for less than their true production costs. Russia, India, Taiwan, Turkey, Brazil, Vietnam, South Korea, and Japan also unfairly prop up their steelmakers, argues Robert Scott, economist at the Economic Policy Institute.

However, instead of pursuing targeted measures, Trump is pursuing across-the-board steel and aluminum tariffs. Thanks to aggressive steel tariffs against China that were previously instated by president Barack Obama, China no longer exports much to the US (at least, not directly). That means the new trade barriers will have a relatively minimal impact on China. Instead, they’ll hurt some of the US’s biggest allies and trade partners. Canada, for instance, makes more than 40% of US aluminum imports and 16% of its steel imports. Germany and Mexico will be hit hard too.

These countries are already protesting the tariffs, and their outrage is largely justified. In addition to hurting US consumers, Trump’s actions deliberately rob from foreign businesses to help American ones.

His proposed steel and aluminum tariffs won’t make US steel and aluminum makers more competitive. Their advantage will come purely from subsidies. As a result, some foreign steel and aluminum firms will go bankrupt; others will be forced to lay off workers. Trump’s tariffs therefore simply move money from one group to another, shifting money from global producers and consumers everywhere to a handful of US steel and aluminum firms without creating new wealth.

That’s a pretty nasty move. So it’s no surprise that other countries are threatening politicized trade actions. The EU has mulled striking back with trade sanctions on US agriculture, as well as on symbolic products like Harley-Davidson motorcycles, Kentucky bourbon, and bluejeans. Canada, too, has threatened “responsive measures.” Trump, meanwhile, on Monday suggested that he would be willing to exempt Canada and Mexico from the tariffs if the countries reached a new agreement on Nafta, although other members of the White House administration said there would be no exclusions from the tariffs.

More broadly, Trump’s move risks undermining international order built on mutual trust in the World Trade Organization, the multilateral system of dispute settlement designed to keep trade fair. In invoking “national security” as the basis for tariffs, Trump is essentially acting outside the WTO. Other countries are likely to follow suit in invoking this loophole to justify their own protections, says Edward Alden, senior fellow at the Council on Foreign Relations.

Politicized retaliation through trade measures is exactly what the WTO is supposed to deter. As Alden notes, “But even if the measures finally unveiled are more limited, great damage is being done. The United States built the architecture of the global economy in its image. The WTO was largely a US creation. Now Donald Trump, in a fit of impulsiveness, may tear it all down.”

If Trump really does want to start a trade war, that may be exactly the point. Getting his way would have dire consequences. At the very least, it would snuff out the global recovery that’s finally gaining momentum.

History suggests there are even worse potential consequences. It was, after all, a trade war between the US and European nations that helped mire the world economy in the Great Depression.