Trump Tariffs: A Negotiating Strategy or a Real Threat to Steel Prices?

Introduction: Stable Steel Prices Amid Political Chaos
As 2025 comes to a close, the steel market remains relatively unaffected by the media frenzy surrounding political headlines, including discussions of potential tariffs from President-elect Donald Trump. Despite the turmoil, steel prices have held steady, with little fluctuation in response to trade threats. This raises an important question: Are Trump’s threats of tariffs a strategic negotiating tactic, or will they genuinely impact steel pricing and trade?

Trump’s Tariffs: A Tool for Negotiation or Immediate Action?
Trump has consistently emphasized his stance on tariffs as part of his broader trade policy, promising potential 10% blanket tariffs on imports from China, 25% tariffs on Canada and Mexico, and even higher tariffs on other nations like the BRICs. The central debate in the steel industry is whether these tariffs are part of a larger negotiation strategy or an imminent threat to global trade.

Industry experts are divided on the issue. On one hand, trade analysts from CRU argue that Trump’s rhetoric could be an attempt to gain leverage in trade negotiations. On the other hand, seasoned trade attorney Alan Price believes that the tariffs are more than just talk and may take effect swiftly after Trump’s inauguration. As we approach January 20, steel companies and stakeholders are closely monitoring these developments, preparing for both scenarios.

Additional Trade Barriers: Tariff-Rate Quotas and Antidumping Cases
In addition to blanket tariffs, the steel industry is facing other trade restrictions that could further impact steel pricing and availability. The Steel Manufacturers Association (SMA) is advocating for the elimination of tariff-rate quotas (TRQs) on steel imports from the European Union, the UK, and Japan, which were initially negotiated under the Biden administration. These TRQs were designed to ease the impact of Section 232 tariffs on U.S. allies, but the SMA now wants them removed to promote fairer competition.

Furthermore, SMA has called for a reduction in the Section 232 quota on South Korea, one of the largest steel suppliers to the U.S. This development is significant, as South Korea’s role in the U.S. steel market is pivotal, and rumors of quota reductions have been circulating. Alongside these concerns, the U.S. is also moving forward with a trade case against imports of coated flat-rolled steel from 10 countries, which may lead to the imposition of antidumping and countervailing duties.

Impact on Steel Prices and Market Volatility
Despite these turbulent trade discussions, steel prices have shown surprising stability. For example, Cleveland-Cliffs held its hot-rolled coil (HRC) price at $750 per ton from mid-September to early December, while other price indices fluctuated between $675 and $700 per ton. This stability is a sharp contrast to the price volatility seen in recent years, including the “Trump bump” after his 2016 election.

One factor that has contributed to this stability is the lack of significant demand growth, which has kept prices from spiking. Additionally, some mills are adjusting their pricing strategies due to uncertainty surrounding Trump’s tariff threats. For instance, there has been talk of a price increase of $100 to $150 per ton in the first quarter of 2025, driven by concerns over potential tariff enforcement.

Demand and Supply Challenges in U.S. Steel Production
While U.S. steel production is benefiting from Section 232 policies that encourage domestic capacity growth, the overall demand for steel remains a challenge. In late 2024, steel buyers have been hesitant to commit to large volumes of steel, fearing that tariffs or other trade restrictions could further disrupt the market. At the same time, U.S. mills are increasing their capacity for sheet and plate production, driven by Section 232 incentives, which could lead to tighter supply in the coming months.

The steel market is navigating a complex landscape, where tariff threats, global supply issues, and domestic production shifts are all at play. Mill executives are closely monitoring the situation, with some predicting a price hike as high as $150 per ton by March 2025, driven by market pressure and tariff uncertainty.

Conclusion: Navigating Uncertainty in U.S. Steel Pricing and Trade Policies
As the U.S. steel industry prepares for the new year, it faces significant uncertainty. The potential for higher tariffs and additional trade restrictions could have a major impact on steel prices, domestic production, and global competitiveness. While some view these tariff threats as a negotiating tactic, others believe that they could lead to immediate changes in the trade landscape. Industry stakeholders must be ready for all outcomes, including potential price increases and shifting market dynamics.