Uncertainty over new tariffs ‘killing’ US steel demand
President Trump’s announcement of potential new tariffs that exceed the initial “reciprocal” rates unveiled on April 2’s Liberation Day has increased uncertainty in the US steel market and the risks to global trade.
Brazil, Canada, the EU and Mexico have received notice that their tariffs could increase further unless trade talks progress ahead of the new August 1 deadline. These “reciprocal” tariffs cannot be applied to US steel imports on top of the existing Section 232 tariffs. However, higher baseline tariffs would raise the cost of US steelmakers’ raw materials, applying upward pressure to steel prices and increasing uncertainty among steel buyers in a climate of low demand.
MEPS US steel market analyst, Laura Hodges, said: “There is not a lot of good news for US steel buyers right now. Interest rates remain high, activity remains cautious and the latest tariff announcements only acerbate this situation.
“We continue to hear from MEPS respondents that it is impossible to plan in this uncertain environment. This ‘wait and see’ approach is killing steel demand.”
Tariff threats aim to accelerate trade talks
Trade negotiations have been slower than the US government anticipated. Originally, a July 9 deadline was set, after which country-specific reciprocal tariffs above a 10% base rate would take effect. Last week, this deadline was extended to August 1.
To accelerate talks, the US government has issued letters outlining new baseline tariff rates to over 20 countries and the EU. Brazil’s rate was raised to 50%, while the EU now faces a 30% tariff, up from 20%, if progress is not made in trade negotiations. Tariffs on Mexico and Canada were increased to 30% and 35% respectively, though these apply only to good that do not comply with the United States-Mexico-Canada Agreement.
So far, only two preliminary trade deals have been announced, with the United Kingdom and Vietnam. Of these, only the UK agreement has been formally communicated, and parts of that deal are now at risk. The UK secured a lower 25% tariff on steel imports into the US. However, this exemption was linked to conditions that must be met by the country’s government by the July 9 deadline. No formal announcement has yet been made and there remains a risk that US tariffs on UK steel imports could revert to the full 50% Section 232 rate.
“Reciprocal” tariffs’ influence on US steel sector
While not directly applicable to steel imports, higher baseline “reciprocal” tariffs could affect US steel demand in several ways. Section 232 tariffs do not cover steelmaking raw materials such as scrap, pig iron and DRI. However, these inputs remain subject to the “reciprocal” tariffs which currently sit at 10% for most countries. Brazil supplies about 30% of total US imports of these materials. If its baseline tariff rises to 50%, it will increase production costs and could weaken downstream demand.
Persistent uncertainty continues to weigh on steel buyers, who have largely stayed on the sidelines, in 2025, as they await clarity on US trade policy.
Against this backdrop of lacklustre demand, respondents to MEPS’s research for its International Steel Review indicate that steel prices have shown limited upward momentum since the doubling of the Section 232 tariff to 50% on June 4. The July contract price for hot rolled coil on the Chicago Mercantile Exchange (CME) reflects this. Having jumped from USD801 per short ton on May 30 to USD923 on June 4, prices have since dropped by almost USD50 per short ton.
With less than three weeks until August 1, the scarcity of finalised trade deals suggest the possibility of yet another extension, prolonging uncertainty and keeping demand sluggish. The likelihood that the 50% Section 232 tariff might be reduced through these negotiations also appears to be decreasing.
US Steel Traders grapple with ‘nightmare’ tariff doubling
US President Donald Trump said during an appearance at US Steel’s Irvin Works outside Pittsburgh, Pennsylvania, on Friday May 30 that he would double Section 232 tariffs from 25% to 50% on steel and aluminium. The news ruined weekends across the nation.
“It’s a nightmare… It’ll destroy the economy, manufacturing — nothing good about it,” a trader said. “Domestic mills will take advantage of this and raise prices. Everything’s been suspended since Friday… I’ve got cargo coming in [this month] and that’s going to be penalized. [The customer] already said they won’t pay for it.”
A West Coast trader said his market is particularly vulnerable to off-the-cuff tariff announcements due to the local reliance on imported steel — which may not be a negative for the Trump administration.
“Importers are scrambling right now, and customers who bought import are also scrambling to ensure they have steel in the next 30-60 days,” he said, adding that it is “probably icing on the cake for the Trump administration — stick it to the states that did not vote for him.”
“Materials that have rolled and have shipped or are at the docks about to ship will have to be renegotiated. What means in terms of who shoulders the burder of the additional 25% is yet to be determined,” he said. “So that being said, I fully anticipate domestic mills will raise prices. Not sure if we’ll see announcements, as the optics might look bad. If you call today, you’ll find mills saying they don’t have availability, which is a crock. They are just waiting to see what they can get away with.”
A distributor told Fastmarkets that domestic mills have essentially stopped quoting “because mills haven’t figured out what they’re going to do yet.”
“Mills have paused their quoting,” he said. “We’ve been talking to traders, and they’re definitely concerned depending on how these things shake out. They’ve got steel on the water. They may need to absorb the tariffs or get the mill to do some absorption.”
Yet another trader called the situation “truly interesting times.”
“A 50% mark-up is impossible to catch in the market — to do any business on imports with customers,” he said. “Domestic mills haven’t changed their prices yet, but with 50%, it’ll always be difficult. Maybe not impossible, but difficult for buyers to make economic sense of importing.”
US court overrules reciprocal tariffs; Section 232 duties remain in place
In a court ruling issued late Wednesday, May 28, Trump’s reciprocal tariffs, imposed on “Liberation Day” on April 2, and the 25% ad valorem duties imposed on Mexico and Canada and 10% duties on China were overturned.
Trump justified the tariffs under the International Emergency Powers Act of 1977 (IEEPA). But “the court does not read IEEPA to confer such unbounded authority and sets aside the challenged tariffs imposed thereunder,” the ruling said.
“Any interpretation of IEEPA that delegates unlimited tariff authority is unconstitutional,” the court added.
“The court holds for the foregoing reasons that IEEPA does not authorize any of the Worldwide, Retaliatory, or Trafficking Tariff Orders,” the ruling concluded. “The challenged Tariff Orders will be vacated and their operation permanently enjoined.”
The decree “has had a positive impact on global markets and by extension US sentiment,” a US-based source told Fastmarkets.
But the 25% tariffs on steel and aluminum, which went into effect on March 12, remain in place.
Some market participants remain frustrated with the tariffs.
“All we can do is wait and see,” a distributor and former auto buyer told Fastmarkets, who believes that Trump will appeal to the Supreme Court to overturn the ruling and allow reciprocal tariffs to go into effect.
Another source said they “are not feeling anything different” about the tariffs.
The Trump administration has already challenged the court’s overruling. The administration filed a notice of appeal to the Court of Appeals for the Federal Circuit on May 28 following the decision.
Financial markets reacted positively to the news. The Dow Jones Industrial average surged by over 500 points in the futures market on the news but fell back to a modest gain after the market opened at 9:30am.
The S&P 500 saw modest gains in the wake of the ruling, while Nasdaq rose significantly. Both indexes have since fallen.
The US dollar surged following the ruling but quickly lost the gains made, according to the US Dollar Index.
Robert England in Delaware, Amy Hinton and Daniel Hillard in Pennsylvania contributed to this story.
EU to reinstate rebalancing measures to combat renewed US Section 232 tariffs
Those rebalancing measures include a mirror 25% tariff on steel and aluminium imports from the US.
In addition, Brussels will impose further countermeasures on the US, targeting approximately €18 billion-worth ($19.6 billion) of goods, which will then apply together with the reimposed measures from 2018.
“The objective is to ensure that the total value of the EU measures corresponds to the increased value of trade affected by the new US tariffs,” a Commission press release read.
“Since the new US tariffs are significantly broader in scope and affect a significantly higher value of European trade, the Commission launched on March 12 a process to impose additional countermeasures on the US,” the Commission said.
The consultation process for additional countermeasures proposed the targeting of industrial products including steel and aluminium products, home appliances, household tools, plastics, wood products, and more.
The countermeasures were expected to enter into force by mid-April.
Trade background
On March 12, 2025, the US imposed 25% tariffs on imports of steel and aluminium products to include those from the EU.
The imposition of tariffs by the US was expected to lead to trade being diverted to new destinations, with steel products flooding toward markets including the EU, undermining local steelmakers and distorting competition.
“[US] President [Donald] Trump’s ‘America First’ policy threatens to be the final nail in the coffin of the European steel industry,” Dr Henrik Adam, president of European steel association Eurofer, said on March 12.
“If European steel disappears, so too does [the] European automotive [industry], European security and defense, energy infrastructure, transportation and others. What is at stake is European sovereignty,” he added.
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“Under the first Trump administration [in the US], we already witnessed the huge effect of Section 232. EU steel exports to the US decreased by more than 1 million tonnes, while of every three tonnes of steel deflected from the US market because of Section 232, two tonnes arrived in the EU,” he said.
“The US tariffs will probably lead to greater global trade imbalances, with steel that would have been shipped to the US going instead to European markets,” Adam said. “The EU was already contending with cheap steel imports – primarily from Asia, North Africa and the Middle East – and the US decision could exacerbate this situation, further damaging the European steel sector.”
The total amount of carbon steel imports to the EU in 2024 was more than 26.36 million tonnes, up by 6.4% compared with 24.78 million tonnes in 2023, Eurofer statistics showed.
At the same time, apparent steel consumption in the bloc amounted to 127 million tonnes in 2024, down by 2.3% from 130 million tonnes in 2023 and lower than during the 2020 pandemic year, when it was 129 million tonnes.
“EU steel production, which lost 9 million tonnes of capacity and 18,000 jobs in 2024 alone, is at even greater risk,” Eurofer said. “There is also the prospect that yet more steel will be deflected to the EU market if additional reciprocal tariffs are imposed by the US.”
Consequently, Eurofer has urged the European Commission to give an adequate response to the US measures to protect the struggling EU steel sector.
“It is crucial that the revised steel EU safeguard measures are robust and effective, to respond immediately and decisively to counter further deflection of the steel imports flooding the EU market. The time has come,” Adam said.
The EU’s existing steel safeguard measures have been extended several times, and were recently subject to a review, with proposed adjustments revealed on March 11. These adjusted measures were expected to come into force in April.
Trump adds downstream goods to steel tariff order
The Trump administration is singling out a list of 167 “derivative” steel items destined for addition to Section 232 tariffs in the US, Kallanish learns from a White House proclamation on Tuesday.
A few examples of the downstream articles are welded angles, shapes and sections of iron or steel; bridges and bridge sections of iron or steel; grill, netting and fencing of iron or steel wire, plated or coated with zinc; parts for agricultural, horticultural or forestry machinery; modular building units of steel, and prefabricated buildings.
Increasing imports of certain derivative steel articles have depressed demand for goods produced by domestic steel producers, Trump argues. He says it is necessary to adjust the tariff to apply to the additional downstream goods. The presidential proclamation says the derivative steel articles may be subject to an additional 25% ad valorem rate of duty. The Secretary of Commerce now has 90 days to establish a process for including additional derivative steel articles within the scope of the duties.
“Section 232 … authorises the president to take action to adjust the imports of an article and its derivatives if the president concurs with the Secretary of Commerce’s finding that the article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security,” the document states.
Tuesday’s proclamation includes an annex that lists the 167 goods by their numbers in the Harmonized Tariff Schedule of the United States.
“Except as otherwise provided in this proclamation, all imports of derivative steel articles specified in Annex I to this proclamation or in any subsequent annex to this proclamation, shall be subject to an additional 25% ad valorem rate of duty, with respect to goods entered for consumption, or withdrawn from warehouse for consumption,” adds the presidential order.
The document states that the initial 25% tariff imposed in March 2018 has been an effective means of reducing imports, encouraging investment and expansion of production by domestic steel producers, and minimised the threat to US national security. Following the initial imposition of 25% tariffs, the US steel capacity utilisation rate increased to above 80%. Recently, the utilisation rate has been 74-75% (see separate story).
Some producers in other countries allegedly have evaded the measures, processing covered steel articles into additional downstream steel derivative products that were not included in the additional tariffs proclaimed in January 2020.
John Isaacson USA
Global markets face economic strains, inflationary pressures, trade measures: Irepas
The global economy faces significant challenges amid uncertainties over US trade policy before the Trump administration takes office Jan. 20, the International Rebar Producers & Exporters Association, or Irepas, said in its latest short-term outlook released Jan. 17.
The proposed tariffs, including a 25% duty on imports from Canada and Mexico, could disrupt supply chains, raise costs and increase global economic strains, Irepas said, adding that rising borrowing costs could further burden industries like construction, which were already struggling with low demand and inflationary pressures.
While some importing countries already subject to Section 232 tariffs, like Turkey, may benefit from a more level playing field in the US, the proposed tariffs may also increase costs for domestic construction, it said.
“These costs impact businesses, especially in capital-intensive industries like construction and could slow economic growth further, thus adversely affecting steel demand in general,” it said.
The pressure on the global long steel products market had been increasing as there was no positive news from China yet, while there was weak demand, market protection and excess capacity, Irepas said.
The EU was expected to announce a revision of its protective measures on April 1, while Turkey and India have already announced market protection measures, it noted.
India launched a safeguard investigation on imports of non-alloy and alloy steel flat products on Dec. 19, while Turkey started an antidumping investigation on cold-rolled, galvanized and pre-painted steel coil imports from China and South Korea in December after imposing antidumping duties on HRC imports from China, India, Japan and Russia in October.
“Competition in the market is very strong, while the market can be described as very poor and unstable, with a very unsatisfactory outlook,” Irepas said.
Platts, part of S&P Global Commodity Insights, assessed Turkish HRC at $550/mt ex-works on Jan. 10, down 22.5% since the start of 2024.
Biden imposes melted-and-poured requirement on Mexican steel
US President Joe Biden has ordered that steel items imported from Mexico must be melted and poured in Mexico, Canada or the US to be eligible for Section 232 exemptions. This effectively slaps a 25% tariff on any steel trans-shipped through Mexico that originated in China or other sources outside North America.
“In my judgment, these measures will provide an effective, long-term alternative means to address any contribution by Mexican steel articles imports to the threatened impairment of the national security by restraining steel articles imports to the United States from Mexico, limiting transshipment, and discouraging excess steel capacity and production,” Biden says in a White House statement seen by Kallanish.
In a presidential proclamation Wednesday, Biden says US domestic steel production utilisation rates remain below the recommended 80% threshold due to the effect of imports. The administration is monitoring unfairly traded foreign entries and circumvention of existing tariff orders.
Commerce Secretary Gina Raimondo has determined that “steel articles are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States,” the proclamation states.
In particular, “imports of steel articles from Mexico have increased significantly as compared to their levels at the time of Proclamation 9894,” which was issued by then-President Donald Trump in 2019.
Biden’s new duty order is effective immediately, the proclamation specifies.
The presidential proclamation states that importers will be required to inform US Customs and Border Protection of the melted-and-poured origin of their steel and derivative steel items. That rule will be implemented “as soon as practicable”.
