US President Donald Trump issued an executive order on Monday February 10 restoring the full 25% tariffs that were initially imposed in 2018, under Section 232 of US trade regulations, to apply to imports of steel articles from all countries, in an attempt to stem a surge in imports that he said once again was a threat to national security.
The order eliminated exemptions and alternative arrangements for some countries put into place over the intervening years that Trump said have weakened the effectiveness of the tariffs. The order was based on a recommendation from US Secretary of Commerce Howard Lutnick.
Under the order, tariff exclusions currently in place will expire on March 12, 2025.
Trump noted that, while US steel consumption declined in 2024, global steel capacity continued to expand, to an excess capacity of 630 million tonnes per year, according to the Organization for Economic Cooperation and Development.
The president’s order cited an 18% increase in imports from Canada since 2018, and highlighted a surge of exports from China in 2024, reaching 114 million tonnes by November, “displacing production in other countries and forcing them to export greater volumes of steel articles and derivative steel articles to the US.”
“This is a very significant action,” according to Christopher Weld, a trade policy attorney at Wiley Rein in Washington, DC.
“If you look at [Section] 232 as it came out in 2018, it had a really significant effect on industry, in terms of investments that followed, and its implementation resulted in increased capacity and capabilities in the US steel industry,” Weld said.
“Over time,” he added, “the beneficial effect of it [for the US] has been whittled down, chipped away as a result of alternative agreements, such as the tariff rate quotas with the EU, the UK and Japan, as well as the absolute quotas allowed for South Korea, Brazil and Argentina.”
With US consumption having declined significantly since 2018, the quota countries have taken a larger share of the US market, Weld said.
Expanded steel tariffs impact mills and manufacturers
The executive order expands Section 232 tariffs to include derivative steel products, imposing a 25% tariff. This aims to address national security concerns and curb the dumping of steel-containing products by countries like China.
The expanded scope of Section 232 tariffs could consequently “address the problem and increase US domestic manufacturing of these downstream products,” Brightbill said.
While supporters argue it will promote U.S. manufacturing of downstream products and have minimal price impacts, critics highlight potential drawbacks.
Downstream manufacturers worry about higher costs, outdated pricing, supply chain issues, and the burden passed on to consumers. Tariff-free imports are allowed for downstream products made with U.S.-produced steel, though disparities in competition remain a concern, particularly with imports from Canada.
“It may be upbeat with the four aluminium smelters in the US, or the very few steel mills that will immediately increase their prices by 25%. For them, this ruling will be the ‘toast of the town’,” Doug Watts, chief executive officer at Metalworking Group, said.
“But for the thousands of manufacturers that are downstream from those mills, and who are buying their products, it is decidedly not ‘upbeat.’ We will be faced with increased costs, obsolete pricing to our customers, and possible supply chain issues,” Watts said.
“The end result [could be] that we will be unable to absorb those costs and will do our best to pass them along to our customers, who will in turn pass them along to the US consumer, who will, unfortunately, be left holding the ingot,” he said.
Mexico prepares to push back against US steel tariffs
Mexico’s steel industry holds its breath after US President Donald Trump announced plans to slap on an additional 25% tariff on steel imported into the US, threatening supply from the US’ third largest exporter.
Late Monday February 10, Trump signed the executive order restoring Section 232 tariffs, with no exemptions or exceptions allowed.
It is still too early to know the impact of the tariffs on the market, but the effects could be widespread, a Mexican trader source said. Other sources anticipate Mexico will respond accordingly but said it was too early to tell.
The US imported an average of 2.41 million short tons of steel mill products per month in 2024, according to the US Department of Commerce. Purchases from Mexican suppliers accounted for 293,000 tons per month, or roughly 12.2% of total US imports.
Mexican economy minister Marcelo Ebrard called the tariffs “unjust” at a press conference alongside President Claudia Sheinbaum on Tuesday February 11. Mexico has not announced an official response to the tariffs yet, but Ebrard plans to meet with US officials next week.
In the US, upstream participants are welcoming the tariffs. American Iron and Steel Institute president Kevin Dempsey celebrated the tariffs as a step toward addressing the “unlevel playing field for American steelmakers.”
Downstream participants, however, told Fastmarkets that the tariffs will likely eat into their margins.
Ahead of the tariffs, January imports of Mexican steel products surged to its highest level since April 2024, according to license data from the US Department of Commerce.
US consumers applied for almost 407,000 tons of steel in January, up by almost 110,000 tons from the prior month and 10% higher year on year.
Brazil urges dialogue with US in response to new steel tariffs
Brazil’s steel industry remains hopeful that discussions between the Brazilian and US governments can lead to a resolution after the US imposed a 25% tariff on all steel imports, Brazilian steel association Aço Brasil said in a statement on Tuesday February 11.
Aço Brasil pointed out that the US has historically maintained a trade surplus with Brazil, averaging $6 billion annually over the past five years. Within the steel supply chain — including coal, steel and machinery — the US has a yearly $3 billion surplus in a trade flow worth $7.6 billion.
The association also highlighted the importance of Brazilian steel for the US market, particularly semi-finished slabs, which American steelmakers rely on due to insufficient domestic supply.
“In 2024, the US imported 5.6 million tonnes of slabs because it lacks sufficient domestic supply to meet demand, with Brazil supplying 3.4 million tonnes under the 2018 quota agreement,” the association said.
“I see this as terrible for the US, and I still don’t understand what the impact will be on the rest of the world,” a Brazilian slab exporter said. “The US imports around 15 million tonnes per year, and they don’t have that spare capacity. So, they will either have to ramp up domestic supply as much as possible or continue importing large volumes even with the tariff.”
Fastmarkets’ weekly price assessment for steel slab export, fob main port Brazil was $520-540 per tonne on Friday February 7, down by $5 per tonne from $525-545 per tonne on January 31.
The Brazilian government has so far not commented on the new tariff or any potential dialogue with the Donald Trump administration.
Aço Brasil reaffirmed that Brazilian steel exports have consistently complied with the quota agreement, dismissing concerns about trade circumvention.
“The Brazilian market has also been hit by a sharp increase in imports from countries… [such as] China. For this reason, Instituto Aço Brasil has requested the Brazilian government to implement a trade defense measure, currently in force under the quota-tariff system,” Aço Brasil said.
“Thus, contrary to what was stated in the US government’s announcement on [Monday] February 10, there is no possibility of steel products from third countries being circumvented through Brazil to the US.”
Despite the setback, the organization argued that the new 25% tariff is not beneficial for either country, and it urged policymakers to consider long-term economic effects.
In December, Aço Brasil president Marco Polo de Mello Lopes said that Brazil, Argentina and South Korea accepted a “hard quota” agreement under Trump’s Section 232 of the Trade Expansion Act, granting a limited amount of steel exports that would not be subjected to tariffs.
