Tariffs threaten U.S. steel and aluminum supply chains

, Washington D.C. Correspondent
Source: Bloomberg NEF, Trump Tariffs on Steel and Aluminum: What Next?

China, Canada and Mexico are the largest suppliers of steel and aluminum products to the United States, BloombergNEF’s latest analysis shows, a dependency President Donald Trump seeks to reverse through tariffs.

Led by China, these countries account for nearly half of the imports of steel and aluminum products that include everything from cars and pipelines to soda cans and baking foils, said BNEF.

Trump levied a 25% duty on imported steel and aluminum and their products in late March. Chinese goods have been subject to a 20% tariff since February. Last month, Trump levied 25% tariffs on all goods from Canada and Mexico then partially reversed course, but the possibility of more tariffs lingers. It is unclear whether levies on all Canadian and Mexican goods would be added on top of the ones imposed on the imports of these two materials.

While U.S. steel and aluminum producers will benefit from 25% tariffs on imports, BNEF said the U.S. doesn’t have enough producers to meet the demand.

Source: BloombergNEF, Trump Tariffs on Steel and Aluminum: What Next?

The analysis doesn’t address the potential emissions impact of these tariffs. But these tariffs could, if they’re in place for long enough, prompt more steel and aluminum production in the U.S., where the process is more energy efficient than it is in some other countries, like China, according to the Climate Leadership Council’s recent American Carbon Advantage report.

However, the U.S. has just four major steel producers and two aluminum producers that mainly supply the metals for large energy and infrastructure projects.

The U.S. lacks the capacity and the technology to produce steel and aluminum for niche applications, like batteries and electric vehicles, leaving automakers and battery makers with no choice but to pay the tariffs, Kwasi Ampofo, head of BNEF’s metal and mining, told Cipher.

“This is likely to drive up the price of steel and aluminum,” Ampofo added.

In response to the tariffs, at last one foreign company is investing in production on U.S. soil. In late March, South Korean automaker Hyundai announced it was building what it described as a “low-carbon” steel plant using natural gas in Louisiana to supply metals for its U.S. factories to avoid tariffs.