Steel industry leaders and governments around the world have reacted with predictable dismay to the decision by Donald Trump to raise the tariffs on steel and aluminium imports into the United States to 50%. The increase took effect on June 4. Australia´s Trade Minister, Don Farrell, said the tariffs were “unjustified and not the act of a friend”. Mr Farrell also told Australian media “The tariffs are an act of economic self-harm that will only hurt consumers and businesses who rely on free and fair trade”. We shall examine the notion of fair trade later in this summary. In a statement, the White House said the main reason for the increased tariffs was that foreign countries were continuing to “offload low-priced, excess steel and aluminium into the United States market, thereby undercutting the competitiveness of the United States steel and aluminium industries”. Last year, Australia exported $640 million worth of steel and $440 million worth of aluminium to the US: just a fraction of our total global exports of $660 billion.

Canada, which exported half of its steel production to the US in 2024, has been the most vocal about the effect of the tariffs. “At a 50% tariff, we basically consider the US market closed – completely closed, door slammed shut, if you will – to Canadian steel,” said Catherine Cobden, chief executive of the Canadian Steel Producers Association. The US is the biggest importer of steel in the world, after the European Union, getting most of the metal from Canada, Brazil, Mexico and South Korea. Mr Trump has said the tariffs are intended to secure the future of the American steel industry. However, critics say the protections could wreak havoc on steel producers outside the US, spark retaliation from trade partners, and come at a punishing cost for American users of the metals.

In further reaction, the European Steel Association, EUROFER, has warned its industry could face catastrophic consequences. “With the doubling of US blanket tariffs on steel to 50% without exceptions, we expect massive deflection of the 27 million metric tonnes (Mm/t) of steel previously destined for the US towards the European market, just as we saw in 2018 when the first US tariffs were introduced,” said Axel Eggert, director general of EUROFER. Imports already constitute 30% of steel consumption in the EU. “Without swift action, we will not just be underwater — we will drown,” Eggert said. He also noted that approximately 3.8 Mm/t of EU steel exports are now effectively barred from the US market due to the prohibitive tariffs, and that a 50% blanket tariff means even Europe’s highest-quality, most competitive steel products will be priced out. The US is the second-largest export market for EU steelmakers, accounting for 16% of total EU steel exports in 2024. In 2023, Germany was the sixth-largest exporter of steel products to the US, after Japan, South Korea, Mexico, Brazil and Canada, with 1.041 Mm/t supplied. “A 50% levy on steel exports is a massive burden for our industry, as it will further increase the pressure on an already crisis-ridden economy and impact our steel industry in many ways,” said Kerstin Maria Rippel, managing director of WV Stahl, the German steel association. She said the measures would add a greater burden on direct exports to the US while, indirectly, traditional supplier countries would divert their steel to the EU, intensifying the already considerable import pressure on Europe. Gareth Stace, director general of UK Steel, which represents steelmakers in Britain, told the BBC that his members had already seen orders cancelled and delayed as a result of the 25% tariffs put in place in March. “The introduction of 50% tariffs immediately puts the shutters up,” he said. “Most of our orders, if not all of them, will now be cancelled”.

It is patently clear that Donald Trump enjoys wielding power and has no concern for who gets hurt along the way. His ego is driven by fawning adulation from his MAGA supporters and from the sycophants surrounding him at the White House. Often, it seems, just the sound of his own voice is enough to thrill him beyond measure. However, love him or loathe him, on the subject of protectionism he has a point. If everybody else is doing it, why shouldn´t he? In its recently-published Steel Outlook 2025, the OECD said: “Competition in the steel industry continues to suffer from a lack of a level playing field. Steel subsidies persist and have become increasingly prominent in regions where steelmaking capacity is growing the fastest, particularly in China and the MENA and ASEAN regions. China’s subsidisation rate is ten times that of OECD countries”. The report claimed governments intervene heavily with policies aimed at promoting industrialisation, strengthening and/or expanding the domestic steel industry, reducing steel import dependency and/or indirectly supporting downstream manufacturing in higher value-added activities. It said measures include subsidised energy prices, direct grants and preferential tax treatment. The report said the support measures distort competition by providing: 1) aid to facilities that might otherwise be closed; and 2) incentives for investment that might otherwise be commercially unjustified. Trump openly admits his tariffs are intended to benefit the American steel industry.

The Steel Outlook 2025 report predicts the global steel industry´s struggles will persist for the remainder of this year as subsidies continue to distort competition. The report also noted that substantial increases in steelmaking capacity of up to 6.7% (165 Mm/t) are planned worldwide from 2025 to 2027 which, if realised, will exacerbate global excess capacity. Asian economies are expected to account for 58% of the new capacity, led by substantial increases in China and India. With demand growth expected to be sluggish at best, capacity utilisation could once again decline towards 70%, putting enormous pressure on even highly competitive steelmakers. The report said that steel prices have already declined from their 2021 peak to historically low levels, although they appear now to be bottoming out. Profitability has experienced a similar trajectory, falling sharply from the relatively strong 2021 level.