Reinstatement of 25% on US steel import tariffs go into effect

The United States government has reinstated its 25% Section 232 tariffs on steel imports, applying the measure to all countries, including Canada.

The decision follows previous discussions regarding potential tariff increases on Canadian steel imports, which were initially considered after Ontario Premier Doug Ford announced a proposed 25% surcharge on electricity exports. However, Ford later paused this initiative and engaged in negotiations with the U.S. administration, preventing additional tariff increases beyond the reinstatement of Section 232 measures.

The broad reapplication of Section 232 tariffs comes shortly after the U.S. imposed a 25% tariff on all imports from Canada and Mexico. In response to industry concerns, President Donald Trump later signed an order exempting automobiles from these tariffs, following lobbying efforts from major U.S. car manufacturers that rely on integrated North American supply chains.

Since the beginning of the year, U.S. steel prices have been increasing, with domestic steelmakers adjusting their list prices in anticipation of higher costs and potential supply constraints. According to data from the American Iron and Steel Institute, steel imports account for approximately 23% of U.S. finished steel consumption, with Canada contributing 6.3% of the total import volume.

A recent report from MEPS International examined the potential impact of the tariff reinstatement, noting that under the revised structure, Canada and Mexico will now face the same trade restrictions as other steel-producing nations. Previously, several countries—including Argentina, Australia, Brazil, the European Union, Japan, South Korea, the United Kingdom, and Ukraine—benefited from exemptions, import quotas, or trade agreements that mitigated the full effect of the tariffs. These countries collectively accounted for 81.9% of the 26.2 million tonnes of steel imported into the U.S. in 2024. Imports from Canada, Mexico, and Brazil alone represented 50.5% of this total.

European Union Launches Consultation on Response Measures

In response to the renewed tariffs, the European Commission has initiated a consultation to determine its course of action. The Commission estimates that the U.S. tariffs will impact $26 billion worth of EU exports, representing approximately 5% of total EU goods exports to the U.S. It stated that the tariff adjustments could lead to U.S. importers incurring up to €6 billion in additional costs based on current trade volumes.

The Commission's proposed countermeasures include potential tariffs on a range of U.S. exports, including boats, bourbon, and motorcycles. The consultation process, which focuses on an initial €18 billion in U.S. exports to the EU, will conclude on March 26, with resulting measures set to take effect in mid-April.

Meanwhile, Canada and Mexico have also announced retaliatory trade actions in response to the March 4 implementation of U.S. tariffs on all exports from their domestic steel producers. Canada has already imposed tariffs on $30 billion worth of U.S. goods as of March 4 and may expand these measures to an additional $125 billion in imports following a 21-day consultation period.

The reinstatement of Section 232 tariffs is expected to have significant implications for global trade, with key stakeholders closely monitoring ongoing negotiations and potential countermeasures from affected countries.

Source: MEPS International, Photo: Fotolia