Election result raises prospect of US steel price rise

Donald Trump’s re-election as President of the United States has prompted concerns that increased import tariffs will apply downward pressure on steel prices in Europe and Asia.

During his election campaign, the former president communicated his intention to boost the US economy by increasing tariffs. All Chinese imports could face tariffs of up to 60%, with a blanket rate of 10-20% more widely applied to imports from other origins. 

Increasing the cost of imports should raise demand for US-produced goods, helping to grow the manufacturing sector. Furthermore, the threat of tariffs may be a useful bargaining tool in US trade negotiations. 

• MEPS International market analysts discussed the inflence of Donald Trump's re-election as President in its Speaking of Steel podcast. The US Election Special episode is now available to view on demand via YoutTube, Spotify and Apple Podcasts.

Among Trump’s priorities will be the activation of a six-year renegotiation clause in the US-Mexico-Canada Agreement (USMCA), which he signed up to in 2018. Senators have already campaigned to reinstate 25% Section 232 tariffs on steel imports from Mexico – the third largest source of steel imports into the US. 

An end to election uncertainty 

Many MEPS respondents in the US were initially positive about Trump’s November 6 victory. The decisive outcome ended the pre-election uncertainty that was partially blamed for a downturn in steel demand and, consequently, prices. In August, MEPS’s US hot rolled coil price dipped to its lowest level since December 2022. This month’s price is 37.3% down on 2024’s January peak. 

The introduction of new steel tariffs would apply upward pressure to domestic steel prices. In March 2018, the implementation of Section 232 tariffs to US steel imports had a marked effect on domestic prices. By July that year, the low end of MEPS’s US hot rolled coil price range had risen to USD1,058 per short ton – up 50.1% year-on-year. 

Section 232 tariffs also reduced the volume of steel imports into the US, US Department of Commerce data shows. Imports averaged 22.7 million tonnes in the two years following the introduction of the tariff, 29.8% down on the 32.4m tonne average in the two years prior. 

Although US steel prices may rise as a result of increased import tariffs, the opposite effect is likely elsewhere. Reduced opportunities to export to the US would exacerbate Asia’s oversupply issues, applying downward pressure to prices there and compelling producers to target other export markets.  

Some MEPS respondents in Europe are concerned that the EU may be slow to increase its own trade defence measures to mitigate exposure to this diverted supply. European producers also fear the potential effects of increased tariffs. The German economy – currently weighing heavily on European recovery hopes – would be significantly affected. Around a quarter of all EU exports to the US originate from the country. 

Identifying industry’s winners and losers 

In the coming months, steel market participants in the US will be attempting to identify areas of opportunity under the new Trump administration. A focus on fossil fuels is expected to result in new steel-consuming projects, following Trump’s “drill baby, drill” campaign comments. However, US crude oil production is already at record levels, reaching a monthly record high of 13.4 million barrels per day in August. 

The outlook for the automotive sector is mixed. Tax credits of up to USD7,500 on the purchase of a new EV are expected to end. This could benefit Tesla, which has established efficiencies that allow it to produce relatively low-cost EVs. Traditional US carmakers are still developing new vehicles to secure sales in a new car segment which achieved a record 8.9% market share in quarter three of 2024. 

Steel market participants will want to see the US government’s USD1.2 trillion Infrastructure Investment and Jobs Act (IIJA) continue as planned. Three years into the five-year federal law, 53% of its funding has yet to be assigned. Nevertheless, it has so far created 66,000 construction projects. The remaining funds could play a key role in accelerating steel demand in 2025. 

• Monthly insight on North America's carbon steel market is published in MEPS's International Steel Review. These monthly reports provide subscribers with steel prices, indices, market commentary and forecasts from key global steel markets. Contact MEPS for details of how to subscribe.