Steel at the heart of Trump’s new trade war as he imposes fresh tariffs

Nevin Al Sukari - Sana'a - PARIS, March 13 — US President Donald Trump’s new tariffs on steel target a major industry that is found in everything from cars to buildings but was already facing a range of challenges.

The 25-percent tariffs, which also hit US imports of aluminium, came into effect at midnight in Washington, hitting numerous nations from Brazil to South Korea, as well as the European Union.

Washington has framed the tariff moves as a bid to protect US steel and American workers as the sector declines and faces fierce overseas competition, especially from Asia.

Who exports steel to the US?

Global steel production hit 1.84 billion tonnes in 2024, a 0.9 percent drop from the previous year, according to the latest figures from the World Steel Association trade body.

China is the biggest producer, accounting for more than half of world output with more than one billion tonnes.

The United States stands in fourth place with 79.5 billion tonnes, which was down 2.4 percent from 2023.

The world’s biggest economy imported 26.4 million tonnes of the alloy in 2023, making it the second-largest market for foreign steel behind the European Union.

Canada tops the list of the United States’ biggest steel providers, exporting 5.95 million tonnes to its southern neighbour last year, according to the US Department of Commerce.

Brazil was next at 4.08 million tonnes followed by the European Union at 3.89 million tonnes, Mexico at 3.19 million and South Korea at 2.5 million.

While China’s total steel exports hit 111 million tonnes in 2024 -- a nine-year high—only 470,000 tonnes were shipped to the United States.

The three top US automakers—Ford, General Motors and Stellantis (Chrysler, Jeep, Dodge) -- have considerable operations in Canada and Mexico and on Wednesday said the higher tariffs would boost their costs. Those higher costs will likely be passed onto consumers.

Why is Trump complaining?

Global overproduction has caused steel prices to plummet in the past year.

Where the steel economy of the past half-century cycled through periods of shortage and plenty, today it faces a structural problem of too much steel being produced, experts say.

That surplus stands at around half a billion tonnes, according to the Organisation for Economic Co-operation and Development.

Many experts point to China being responsible for most of that overcapacity, and there are suspicions that Beijing has subsidised steelmakers.

This month, China said it would cut output by its massive steel industry to address overcapacity and halt plunging profits in the sector, without providing details.

Is overcapacity to blame?

Some analysts argue that overcapacity is not the main culprit.

Marcel Genet, a steel expert and head of the French consultancy Laplace Conseil, said the problems in the industry stem mainly from the lack of competitiveness of old blast furnaces.

Such furnaces produce steel from iron ore and coal, compared to steel made from recycled scrap in electric arc furnaces, which is much cheaper to produce.

Companies with “traditional blast furnaces don’t have the funds to finance their energy transition”, meaning they are unable to replace coal “without massive state aid”, Genet said.

Moreover, US and European steelmakers are under pressure as their exports have been dropping for the past half century as emerging countries develop their steel industries, he added.

Japan’s Nippon Steel sought to buy struggling rival US Steel, but the bid was blocked by former president Joe Biden.

In Europe, around 50 blast furnaces remain, Genet said.

Most are operating at under 70 percent of capacity and have halted plans to invest massively in lower-emissions projects.

What happened last time?

Trump had already imposed tariffs of 25 percent on steel and 10 percent on aluminium during his first term in office in 2017-2021.

The last 12 blast furnaces in operation in the United States are owned by US Steel, which is based in Pittsburgh, Pennsylvania, and Cleveland Cliffs in the state of Ohio, both key states in US elections.

The move had a very limited impact, said Ruben Nizard, an economist at French insurer Credit Coface.

US imports of steel fell by 24 percent over the period and imports of aluminium by 31 percent, according to a report by the US International Trade Commission.

“No clear benefits have emerged, either in terms of employment or production, and prices have increased,” Nizard pointed out. — AFP