After a typical White House day of chaos and indecision, Donald Trump overnight announced the most dramatic moment of US protectionism in decades: the imposition of 25% tariffs on steel imports and 10% on aluminum.

The tariffs, which are higher than earlier forecast, will almost certainly spark retaliatory measures from countries affected by them. The top five steel importers for the US are Canada, Brazil, South Korea, Mexico and Russia. China is the 11th largest importer, and already subject to restrictions imposed by Trump. Australia is a small player in the US market, but BlueScope Steel exports around $170 million a year there, and Malcolm Turnbull lobbied furiously during his Washington trip last week for Australia to be exempted. BlueScope, however, will also benefit from the tariffs, because it owns a major steel maker called North Star in Ohio and has controlled 100% of the business since late 2015, generating hundreds of millions of dollars in profits.

Troublingly for Turnbull, the New York Times reported that “Mr. Trump told a group of executives that he did not want any nation to be exempted from the order, arguing that if one country was exempt, all other countries would be in line to ask for similar treatment, the executive who attended the meeting said. The president also argued that metals could end up being shipped to the United States through exempted countries.” We won’t find out until the formal announcement of the policy detail next week whether Bluescope has been spared.

If Australia is not exempted, it will represent a major defeat for Malcolm Turnbull, who has made a point of publicly cultivating a close relationship with a president who is profoundly disliked by Australians and seen as a threat to us. The cost of cosying up to Trump will have been incurred with no visible benefit.

Even if Australia is exempted, however, the potential impact on world trade is deeply worrying for a small, trade-reliant country like ours. The impact of the Trump announcement was immediate on Wall St, which has already suffered through a grim February. The Dow fell 420 points, or about 1.7%; the S&P 500 finished down 1.3%; the Nasdaq shed 1.3%. Here, the ASX 200 was down 0.5% this morning — though Bluescope, courtesy of North Star, was up.

The desire to protect local jobs in Western economies is a potent and understandable one. Workers want governments to look after them first, rather than the foreign workers they believe benefit from free trade policies. Trump is an avatar of that surging protectionist sentiment across the West. But tariffs are the worst kind of populism because, while in theory they are to protect local jobs, history shows local steel firms use them to increase prices and reward shareholders instead. US steel manufacturing has been shedding jobs for decades — employment has fallen from over 600,000 to just 140,000 since the 1960s, as much due to technology-driven productivity improvements as foreign competition. Tariffs from the Nixon years onwards — Reagan, Clinton and George W. Bush all used them — have done nothing to arrest that slide as electric arc furnaces have spread, scrap steel has been used more, blast furnaces have become more efficient and robots have taken jobs.

Worse, tariffs punish local customers already using imported steel, who face — in this case — a 25% rise in their building supply costs. Those costs flow on into every household and business across the country. Local jobs are then hit by retaliation from exporting countries. As the 1930s demonstrated, these tariff wars end up impoverishing us all — thereby exacerbating the anger within electorates, not assuaging it.