Resetting 25% US tariffs brings equality for global steel exporters

The newly announced 25% tariff on all steel imports into the United States is set to create a level playing field for steel-producing countries vying for access to the American market. This policy shift follows an initial proposal to impose tariffs on imports from Canada and Mexico starting February 4, which was subsequently delayed by a month.

President Donald Trump revealed the comprehensive 25% tariff policy, which effectively nullifies all existing free trade agreements and exemptions related to the Section 232 tariffs introduced during his first term in March 2018.

The new tariff measures will apply to all steel-producing nations, including Canada and Mexico, unless any last-minute trade deals are secured. As of March 12, Canada and Mexico will join Argentina, Australia, Brazil, the European Union, Japan, South Korea, the United Kingdom, and Ukraine in facing the full 25% tariff.

These countries collectively accounted for 81.9% of the 26.2 million tonnes of steel imported into the US in 2024. Imports from Canada, Mexico, and Brazil alone represented 50.5% of this total.

While steel buyers needing specialty products not produced in the US will still find supply options, no new product-based tariff exclusions will be granted. However, existing product exclusions will remain valid for 12 months or until the allocated volume is imported.

According to MEPS International, which first published this analysis in its International Steel Review, concerns among US market participants can be noted that the tariffs could drive up steel prices. For example, Nucor’s spot price for hot rolled coil increased from USD 775 per short ton on February 3 to USD 820 by February 17. February’s research by MEPS highlighted broad price increases, including a 15.4% rise in hot rolled coil and a 12.5% increase in plate prices.

With higher prices, the US steel market may become more attractive to overseas producers whose prices were previously uncompetitive due to selective Section 232 tariff exemptions. As of February, MEPS reported that the US hot rolled coil price was 31% above the MEPS World Average for this material.

According to MEPS respondents, Turkish and Egyptian hot rolled coil mills may gain from this market shift. Steel exports from Turkey to the US dropped from nearly two million tonnes in 2017 to 391,444 tonnes in 2024. An increase in offers from Vietnamese and Taiwanese cold rolled and hot dipped galvanised coil producers is also anticipated, along with rebar imports from Algeria, Egypt, Oman, Saudi Arabia, Thailand, Turkey, and Vietnam.

A ceasefire in the Red Sea region might reduce shipping costs and enhance the competitiveness of Asian steel imports into the US market. The Joint Maritime Information Center reported no cargo ship attacks in the Red Sea and Gulf of Aden since Houthi rebels agreed to a ceasefire on January 19, contingent on the continuation of a pause in Israeli attacks on Gaza.

While uncertainty remains high and many vessels are avoiding the route, DP World's chief executive Yuvraj Narayan told Reuters that freight prices could drop by 20-25% within two to three months if the ceasefire holds.

The Drewry WCI composite index showed a 10% week-on-week decrease to USD 2,795 per 40-foot container in the week to February 20. Although this is a 52.9% drop from the July 2024 peak, it remains 97% higher than the pre-pandemic average of USD 1,420 in 2019.

Source: MEPS International, Photo: Fotolia