Will new import tariffs boost US stainless steel sector?

A global pandemic and international conflicts lessened the long-term effects of Donald Trump’s Section 232 tariffs on stainless steel imports into the United States following their implementation in 2018.

Here, MEPS International steel market analyst Michelle Kirton explores whether president-elect Trump’s return to the White House will bring additional import duties on stainless steel into the United States and revitalise the effectiveness of the current measures.  

Unfair competition and Section 232 

In 2015, the US imported 794,458 tonnes of stainless steel, with China, Mexico and Taiwan comprising nearly one-third of the total volume. However, growing concerns about global steel overcapacity prompted several investigations into unfair trade practices, including dumping and foreign government subsidies.

From 2016 onwards, there was an increase in the number of antidumping and countervailing duties being imposed, especially on China. In 2015, China had a 22% share of total US stainless steel imports, but by 2017 it had fallen to just 5% as a result of these measures. Shipments from other countries like Taiwan, Mexico and Vietnam continued to grow. 

On April 23, 2018, three months into President Trump’s first administration, Section 232 duties came into effect. They aimed to protect the local producers by placing further restriction on steel imports into the US. The policy imposed a 25% duty on all steel imports and a 10% duty on aluminium, although some of the US’s key trading partners quickly negotiated exemptions and tariff-free quotas. 

Initially, the tariffs led to a sharp reduction in imports, particularly for cold rolled stainless steel sheet and strip, as well as bar and other long products, which together account for nearly 75% of all US stainless steel imports. By 2020, volumes had declined to their lowest level for over two decades, demonstrating the policy’s effectiveness in curbing imports. However, part of the decrease can also be attributed to the reduced movement of goods caused by global trade restrictions implemented as part of efforts to mitigate the spread of Covid-19.  

Covid-19 pandemic reduces domestic market share 

The United States stainless steel industry was experiencing steady year-on-year growth before the Covid-19 pandemic.

Domestic stainless steel production peaked at 2.8 million tonnes in 2018 but then experienced a significant decline in the following years, dropping to 1.82m tonnes by 2023. Similarly, US stainless steel mill exports fell by over 50% during the same period, decreasing from 616,331 tonnes in 2018 to 307,215 tonnes by 2023. 

Imports remained stable, however, with 662,287 tonnes arriving in 2018 compared with 650,319 tonnes in 2023. Many buyers were unable to secure domestically produced material during the height of the pandemic and had to rely on overseas suppliers, resulting in a loss of market share for US mills in their home market.     

Disruptors and the rise of imports 

Between 2020 and 2021, major disruptions – including Covid-19, Russia’s invasion of Ukraine, and conflict in the Middle East – also played a part in the shift in import dynamics. After a sustained decline in imports throughout 2020, volumes surged in 2021 and 2022 as domestic mills prioritised large customers, leaving smaller buyers dependent on foreign material.  

Many importers were able to avoid the Section 232 duties during this time by applying for exemptions. However, by 2023, as domestic supply constraints eased, the number of approved exemptions started to fall, and existing ones expired. Imports began to decline again. Cold rolled stainless steel coil imports, in particular, are likely to hit their lowest levels since 2020, this year.  

New Trump administration: the outlook for imports 

Many believe that without the unprecedented global disruptions following the implementation of Section 232 duties, the decline in stainless steel imports would have continued. As part of his presidential campaign, Donald Trump has promised increased tariffs and stronger protections for the US steel industry.  

Already, buyers are attempting to expedite deliveries ahead of any potential new tariffs that may be introduced by the Trump administration. Meanwhile, overseas suppliers have been contacting their customers with special ‘pre-Trump’ offers. This could lead to a short-term spike in imports in the new year, followed by the return to a downward trend.  

Domestic stainless producers are expected to recover some market share in the coming years. However, this is likely to drive up stainless steel prices, increasing the gap between stainless steel prices in the US and those in Europe and Asia. Despite the potential benefits, some MEPS respondents in the US are concerned that excessive protectionism may fuel inflation and make exporting manufacturers less competitive in the global market.