A new round of tariffs from the Trump administration has garnered support from US steel and aluminum producers, although the latter have cautioned about their reliance on imports, while some experts warned the duties could be troublesome for manufacturers and the broader economy.
US President Donald Trump is implementing new 25% tariffs on all steel and aluminum imports starting March 12, amid ongoing trade tensions with major suppliers, including the country’s top trading partners. While US steelmakers and aluminum producers were supportive of the tariffs, several supply chain experts said there could be negative impacts from the measures, from which there are no exclusions — unlike the now-delayed executive order that would have placed tariffs on goods from Canada and Mexico.
“Depending upon where the demand increases for steel, and the new trade alliances that are forming and will be formed due to the political and economic realignment taking place already, my sense is that producers and users of steel will see a negative impact due to the tariff,” said Sunderesh Heragu, president-elect of the Institute of Industrial and Systems Engineers.
The top importers of steel and aluminum to the US are Canada, Brazil, Mexico, South Korea and China, according to S&P Global Market Intelligence data. In 2018, during his first term in the White House, Trump imposed Section 232 tariffs of 25% on steel imports and 10% on aluminum imports but ultimately granted concessions to several large steel-exporting countries. Some world leaders are already hoping for the same with the new round of tariffs or are preparing retaliatory measures.
Previously, Trump announced a 10% tariff on imports from China and energy imports from Canada as well as 25% tariffs on other imports from Canada and Mexico. Those were set to begin on Feb. 3, but the tariffs on imports from Canada and Mexico were stalled following promises from both countries to enact policies related to drugs and illegal immigration.
Trump’s tariffs will likely add to the already bearish sentiment around the iron and steel sector, John Hamming, an associate director at ICAP, a markets operator and provider of post-trade risk mitigation and information services.
“Should Trump follow through, US domestic steel prices will go up as domestic producers will face less competition, whereas other steel-exporting countries like China, the EU and Canada may retaliate with their own trade barriers leading to a broader trade war affecting global steel supply and pricing structures negatively,” Hamming said. “Whatever the outcome, any effects are likely to take time depending on how long the tariffs will last and how other countries respond/retaliate.”
Aluminum industry seeks exemptions
The steel industry welcomed the news as they awaited the particulars of the tariffs.
A “robust and reinvigorated trade agenda” is needed to address market-distorting policies that leave US steelmakers at a disadvantage, said Kevin Dempsey, president and CEO of the trade organization American Iron and Steel Institute.
United Steelworkers International President David McCall also applauded the potential tariffs for their potential to curb imports but called for a more surgical policy approach as opposed to blanket tariffs.
“We must distinguish between trusted trade partners, like Canada, and those who are seeking to undercut our industries as they work to dominate the global market,” McCall said. “Canada is not the problem. Indeed, Canada has taken steps to coordinate their trade policies with the US to respond to unfair foreign trade, and applying across-the-board tariffs ultimately hurts workers on both sides of the border.”
The US steel imports accounted for about 22% of steel supply between 2019 and 2023, “with recent years more elevated than the average,” Martin Englert, a senior analyst with Seaport Research Partners, wrote in a Feb. 10 note.
“Given the potential for price increases, we have a positive bias toward steel and advise investors to watch fundamentals closely and consider increasing exposure to steel equities,” Englert wrote.
After Trump issued his initial executive order announcing 25% tariffs on Canadian and Mexican imports, the Aluminum Association immediately called for exemptions on aluminum imports. The US industry sources about two-thirds of its primary aluminum from Canada and about 90% of its scrap imports come from either Canada or Mexico, according to the association.
Charles Johnson, president and CEO of the Aluminum Association, again alluded to the US aluminum sector’s reliance on outside supply in a Feb. 10 statement on Trump’s latest tariff proposals.
“We look forward to reviewing the president’s action and appreciate his continued focus on strong trade actions to support the aluminum industry in the United States,” Johnson said. “President Trump has previously ensured the supply of input materials for domestic aluminum manufacturers, resulting in $10 billion in US industry investment since 2016.”
During a Feb. 10 earnings call, Devinder Ahuja, executive vice president and CFO of Virginia-based aluminum rolling and recycling company Novelis Inc., said there was not enough of the metal in the US and that the company’s shipments between Canada and the US deserved exemptions from tariffs on aluminum.
“Our historical experience is that we get [tariff] exemptions when we apply. So, we are pretty confident that while there will be some short-term noise around it; exemptions are granted in all the deserving cases,” Ahuja said.
Platts, part of S&P Global Commodity Insights, assessed the daily TSI US HRC index at $770/st on an ex-works basis Feb. 10, up $25 from Feb. 7.
This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.
