In a move that has shaken global trade, U.S. President Donald Trump has signed an executive order reinstating a 25% tariff on steel imports. Effective March 12, 2025, the tariffs will apply to all countries without exemptions, reversing the previous exclusions granted under the 2018 measures. Based on recommendations from U.S. Secretary of Commerce Howard Lutnick, the decision aims to curb surging steel imports, which Trump argues pose a national security threat and undermine American manufacturing.
The tariffs will hit major steel exporters—including Canada, Mexico, Brazil, South Korea, Japan, and the European Union—many of which had previously negotiated alternative trade agreements. This move comes as global steel production, led by China, continues to expand, with excess capacity reaching 630 million tonnes per year, according to the Organization for Economic Cooperation and Development (OECD).
Trump’s order highlights a surge in Chinese steel exports, which climbed to 114 million tonnes by November 2024, displacing production in other nations and driving steel shipments into the U.S. market. As per reports, the steel tariffs are to crack down on Chinese steel entering the U.S. through third countries.
After the tariffs imposed in 2016 and 2018 to limit direct steel imports from China, there has been an indirect flow of Chinese steel into the U.S after being sold to other countries where processing or minimal changes are made before re-exporting to the U.S. After 25% steel tariffs imposed on all steel entering the country, China’s four leading steel consultancies claim that it will impact the Chinese steel exports, reducing this trade, hitting China’s struggling steel industry.
While the tariffs are expected to boost domestic steel production and employment, industries reliant on steel—including construction, automotive, aerospace, and energy—unfortunately face rising costs. Specialty steel imports, such as high-grade pipes and tubes used in the oil and gas industry, are crucial for U.S. operations, and higher tariffs could increase production costs for American energy firms.
Supporters of the tariffs argue they will revitalize American steel production, create jobs, and prevent unfair trade practices. The White House press release emphasized that increasing steel imports from Canada and Mexico—rising from 7.77 million metric tons in 2020 to 9.14 million metric tons in 2024—posed a direct threat to national security. Additionally, alternative trade agreements with Australia, the EU, Japan, and the UK were deemed ineffective in safeguarding U.S. industry.
However, critics warn that the tariffs could harm downstream manufacturers by increasing raw material costs, disrupting supply chains, and ultimately passing the burden onto consumers. The Peterson Institute for International Economics estimates that the economic cost to taxpayers will far exceed the benefits, raising concerns about inflationary pressure and trade retaliation.
US’s Economic Trade-Offs
While the U.S. steel industry welcomes the latest tariffs, concerns are mounting over their broader economic impact—particularly on industries that rely heavily on steel. Similar to the Trump administration’s 2018 tariffs, these new measures could lead to significant job losses in manufacturing due to rising costs and retaliatory trade actions from other nations. The increased cost of steel will ripple across multiple sectors, affecting the construction, automotive, packaging, appliances, machinery, oil and gas, and electrical industries. Automakers, in particular, are expected to see production costs rise, potentially making cars more expensive for consumers. Manufacturers may pass these additional expenses down the supply chain, leading to price hikes across various goods.
The Peterson Institute for International Economics warns that the tariffs could cost taxpayers more than the jobs they save or create, highlighting the risk of net economic losses. Historically, steel tariffs have resulted in higher consumer prices and job cuts in downstream industries that depend on affordable steel and aluminum. Anticipation of the tariffs has already triggered a rush in steel imports. In January, imports of Mexican steel into the U.S. surged to their highest level since April 2024, according to U.S. Department of Commerce data. This signals that businesses are stockpiling materials before higher costs take effect.
Upstream steel producers are celebrating the tariffs, seeing them as a boost for domestic manufacturing. However, downstream industries that rely on steel and aluminum fear the move will eat into their profit margins, forcing difficult financial decisions. If past trends hold, these pressures could lead to reduced investment, slowed production, and potential layoffs in sectors that heavily depend on imported metals.
Exemptions, Retaliation, and Economic Ripples
As the U.S. moves forward with its latest 25% tariffs on steel and aluminum imports, key trade partners are scrambling for exemptions, while others are gearing up for retaliation. The economic and political ramifications are already unfolding, with Canada, Mexico, Brazil, and South Korea among the most affected.
Canada, the U.S.’s largest steel supplier, is expected to feel the sharpest impact. Prime Minister Justin Trudeau has called the tariffs “unacceptable” and hopes to resolve the dispute without resorting to countermeasures. Meanwhile, Mexico, which supplies 12.2% of U.S. steel imports, is weighing its options. Economy Minister Marcelo Ebrard denounced the tariffs as “unjust,” while President Claudia Sheinbaum has opted for a diplomatic approach, expressing hope for an agreement before the tariffs take effect.
Beyond North America, steel producers in Brazil and South Korea are also facing disruptions. Brazil, which sends nearly half of its steel exports to the U.S., relies heavily on this trade, particularly for semi-finished slabs used by American manufacturers. Aço Brasil, the country’s steel association, has pointed out that the U.S. maintains a trade surplus with Brazil, averaging $6 billion annually. South Korea, though exporting less steel to the U.S. than before, remains vulnerable as exemptions from previous tariffs come to an end.
Other countries, including Japan and Australia, are also pushing for special deals. Japan has previously negotiated exemptions, while Australia, which runs a trade deficit with the U.S., may receive favorable consideration. Trump has signaled openness to an exemption for Australia, though no official commitments have been made.
European leaders have already warned of potential countermeasures. European Commission President Ursula von der Leyen stated that the EU would pursue “firm and proportionate” responses. Canada and Mexico may also retaliate, following the playbook from Trump’s first term, when they imposed countertariffs on American goods like bourbon, motorcycles, and agricultural products. Such actions could further strain global supply chains and increase prices for consumers.
The economic impact of these tariffs could mirror the fallout from Trump’s 2018 steel duties, which led to a 10% increase in steel prices within months. U.S. businesses that depend on imported steel are already expressing concerns about rising costs and supply disruptions. If negotiations fail, the tariffs could escalate into a broader trade dispute, with ripple effects across multiple industries.
Unfazed by potential backlash, Trump defended the tariffs as a necessary step for economic revival. “This is the beginning of making America rich again,” he declared while signing the executive order. “It’s time for our great industries to come back to America… this is the first of many.”
As global steel markets brace for the impact, the long-term effects of these tariffs remain uncertain. With trade partners weighing countermeasures and U.S. industries calculating costs, the move sets the stage for renewed tensions in international trade.