Potential US tariff hikes may spur stainless steel import surge

The prospect of increased tariffs on stainless steel imports to the United States, as reported by MEPS International, could lead to a short-term surge in import volumes, potentially challenging domestic producers’ pricing strategies. MEPS, a leading provider of market insights on stainless steel, shared these observations in its latest Stainless Steel Review.

During his presidential campaign, President-elect Donald Trump proposed measures aimed at bolstering domestic manufacturing and increasing revenue through elevated import tariffs. MEPS highlights that suggested tariffs could reach as high as 60% on Chinese imports, with a general rate of 10-20% on goods from other nations. The analysis also notes potential changes to the existing 25% Section 232 tariff, initially implemented in March 2018, and a renegotiation of the US-Mexico-Canada Agreement (USMCA).

Preemptive Import Activity

According to MEPS research, US stainless steel importers are attempting to mitigate the risk of higher tariffs by offering "pre-Trump import packages" and accelerating delivery schedules to avoid potential cost increases. MEPS data reveals that stainless steel imports to the US totaled 763,510 tonnes by the end of September 2024, marking a 9% year-on-year increase. This recent growth contrasts with the overall decline in imports last year, which fell 18.1% to 933,615 tonnes from 2022’s 1.14 million tonnes.

MEPS further notes that domestic stainless steel production has struggled, with output decreasing 9.2% year-on-year in 2023 to 1.82 million tonnes. Analysts at MEPS warn that a short-term spike in imports could exert downward pressure on stainless steel prices in the US, where demand remains subdued.

Market Dynamics and Price Projections

MEPS’s analysis highlights how past tariff measures, such as the Section 232 import duties, influenced US stainless steel prices. Following the introduction of these tariffs in 2018, the MEPS low-range price for 304 cold-rolled coil rose 27.7% to USD 3,135 per tonne between January and July of that year. Imports also declined significantly, falling by 30.8% between 2017 and 2019.

Looking ahead, MEPS forecasts a dip in US stainless steel prices in December 2024, followed by a potential rebound in the first quarter of 2025. However, the uncertainty surrounding the Trump administration’s tariff plans poses a risk to these predictions. MEPS underscores that a short-term influx of imports could temporarily suppress prices before tariffs make imports less competitive, potentially driving demand for US-made products.

Global Trade Implications

MEPS also draws attention to the global repercussions of potential US tariffs. European stainless steel producers, surveyed by MEPS, have expressed concerns about reduced export opportunities to the US, which could lead to falling prices in their domestic markets. This challenge is compounded by pressure from Asian steelmakers, who may redirect surplus production to Europe in response to changing US trade policies.

While some US market participants initially believed Trump’s tariff proposals would serve as a negotiating tactic, MEPS notes that his recent reaffirmation suggests he intends to follow through. This development underscores the interconnected nature of global stainless steel markets and the broad implications of US trade policy shifts.

Source: MEPS, Photo: Fotolia