Higher metals tariffs took effect at 12:01 a.m. Wednesday, doubling U.S. duties on imported steel and aluminum to 50%, as President Trump ratchets up his global trade offensive. The move, announced via an executive proclamation, applies to all trading partners except the U.K., which remains at the previous 25% rate due to a preliminary trade accord. With approximately one quarter of U.S. steel coming from abroad, Canada and Mexico brace for outsized impacts, as they rank first and third in steel export volumes to the United States.
Treasury Secretary Kevin Hassett explained the decision at a Washington steel industry forum, citing the need for additional protection for domestic producers. Under the expanded levies, countries must also deliver their “best offers” by today to avert broader “Liberation Day” tariffs scheduled for early July. In mid-May, the White House paused certain proposed tariffs in exchange for concessions, but only the U.K. has thus far sealed a deal to avoid the metals surcharge.
Market Overview:- Steel and aluminum tariffs hike to 50% from 25%, sharply increasing import costs.
- U.K. remains exempt at 25% due to preliminary trade framework; Canada and Mexico face the greatest exposure.
- White House deadline for “best offers” arrives amid talks on broader tariff avoidance deals.
- Imported steel accounts for 25% of U.S. supply; Canada and Mexico dominate aluminum imports.
- Higher levies have already driven aluminum price premiums above recent-year averages.
- Non-U.K. partners risk additional 10% baseline tariffs if no agreement by July 8.
- Partners’ proposals under review to determine post-pause tariff “landing zones.”
- Failure to reach deals could leave many exporters saddled with rates far above 10%.
- Persistent uncertainty may keep metals prices elevated and cap demand in coming weeks.
- The increased tariffs to 50% on steel and aluminum are intended to protect America’s critical domestic steel and aluminum industries from unfair trade practices and global excess capacity, aligning with national security interests.
- The move is designed to compel U.S. businesses to purchase more from domestic suppliers, thereby strengthening the U.S. manufacturing base.
- Shares of major U.S. steel companies, such as Nucor, Cleveland-Cliffs, and Steel Dynamics, surged following the announcement, reflecting investor optimism about increased profitability for domestic producers.
- The tariffs are applied under Section 232 of the Trade Expansion Act of 1962, which grants the President authority to adjust imports that threaten national security.
- Strict reporting of steel and aluminum content is required, with penalties for false declarations, aiming to crack down on circumvention of duties.
- The doubling of tariffs to 50% is expected to significantly increase costs for U.S. businesses and consumers, as the U.S. imports about 25% of its steel and does not have the domestic capacity to meet current demand.
- Industries heavily reliant on steel and aluminum, such as automotive, construction, appliances, and packaging (e.g., canned goods), will likely face higher material costs, which may be passed on to consumers.
- Trading partners like Canada (the largest supplier of imported steel and aluminum to the U.S.) and Mexico face severe economic consequences, with Canadian industry warning of "unrecoverable consequences."
- The tariffs could lead to retaliatory measures from other countries and further escalate global trade tensions.
- While U.S. steel prices are expected to soar, the redirection of steel to other markets, like Europe, could depress prices there, creating an uneven global market.
- Economists and industry experts have criticized the policy as economically inconsistent, potentially harming downstream U.S. industries more than it helps domestic metal producers.
- The persistent uncertainty surrounding these and potential future "Liberation Day" tariffs may keep metal prices elevated and could cap demand as businesses struggle with unpredictable costs and supply chains.
With little capacity to expand domestic production, U.S. buyers are expected to absorb higher prices unless economic stress curbs demand. Prime Minister Mark Carney of Canada and Mexican Economy Minister Marcelo Ebrard have both called the tariffs unsustainable, highlighting trade imbalances that see Mexico importing more U.S. steel than it exports.
As markets digest the surprise metals surcharge, strategists warn that “Liberation Day” looms with potentially broader import duties if partner proposals fall short. Commodity traders are closely watching U.S. steel and aluminum exchanges for volatility, while industrial users weigh production costs against tenuous profit margins.
