Steel producers, distributors and end users took a range of views on the second round of Section 232 steel and aluminium tariffs on Wednesday March 12, the first day they formally came into effect. The effective tariff increase to 25% hit all imports of steel and aluminium, as well as derivative products made from the metals; prior exemptions and quotas have expired.
While the threat of tariff pressure has been pushing steel prices up — in line with industry sentiment — the overall effect of the tariffs on the health of the steel supply chain remains an open question.
Some downstream producers are opposed to pitting an increase in prices against lackluster consumer demand, while others are encouraged by the new tariffs’ inclusion of derivative products.
“Including steel derivatives makes a lot of sense,” said Alliance for American Manufacturing president Scott Paul in a March 12 statement. “This addition will ensure that importers can’t game the system and American companies that make these products have a level playing field.”
One steel distributor and heating, ventilation and air conditioning (HVAC) manufacturer — as well as a long-time tariff supporter — told Fastmarkets that he is concerned that tariff-driven price increases may not hang around without an uptick in demand.
“I think the tariffs will continue to cause consumers to ‘panic’ buy, though I don’t know how much longer that will stick without the demand,” the distributor said.
“Even though we are getting a lot of calls, many customers are still getting ‘deals’ from service centers that are not raising prices when they should be. If the tariffs end up coming off or being watered down, I could see the price of steel dropping again, especially since scrap for March isn’t as stellar as experts once thought it would be,” the source added.
At the other end of the market, at least two major steel producer trade groups praised the new round of Section 232 tariffs.
American Iron and Steel Institute (AISI) president and chief executive officer Kevin Dempsey praised the new tariffs’ lack of an exclusion process which foreign producers allegedly “exploited as a loophole.”
“AISI applauds the president’s actions to restore the integrity of the tariffs on steel and implement a robust and reinvigorated program to address unfair trade practices,” Dempsey said in a March 12 statement. “America must have a sustainable, commercially viable steel industry to meet its national security needs.”
The sentiment was echoed by Philip Bell, president of the Steel Manufacturers Association.
“As the revised steel tariff goes into effect [on March 12], President Trump is boldly declaring that America will no longer be a dumping ground for cheap, subsidized foreign steel,” he said. “By closing loopholes in the tariff that have been exploited for years, President Trump will again supercharge a steel industry that stands ready to rebuild America.”
