US prices of steel and aluminium spiked yesterday while shares of foreign steelmakers slumped after US President Donald Trump said he would double tariffs on imports of the two metals to 50 per cent.
Trump announced on Friday the new steel and aluminium levies, which take effect tomorrow, intensifying a global trade war just hours after he accused China of violating an agreement with the US to mutually roll back tariffs and trade restrictions for critical minerals.
The US is the world’s largest steel importer, excluding the European Union, with a total of 26.2 million tonnes of steel imported in 2024, according to the Commerce Department.
While some industry experts questioned whether the tariffs would be implemented as stated, in light of Trump’s previous reversals, they said uncertainty and climbing prices of the metals would dampen industrial activity.
“Higher prices are also likely to weigh further on US steel demand from the manufacturing sector, which we already expect to contract this year,” said analyst Eoin Dinsmore at Goldman Sachs.
The premium for consumers buying aluminium on the physical market in the US jumped 54pc, while US hot rolled coil steel climbed 7.4pc.
Copper prices also surged as traders bet that Trump would impose hefty duties on the metal used in power and construction. US copper touched a near two-month peak, widening its premium over benchmark London prices.
Germany’s second-biggest steelmaker Salzgitter warned that Washington’s tariff policy was dealing a severe blow to European industry.
The US accounted for around a fifth of European steel exports outside of the EU, according to Germany’s steel association.
“The risk for the European market, as well as other regional markets, is that some of the trade flow could reroute,” said Bastian Synagowitz at Deutsche Bank.
Analysts were sceptical whether the full force of the tariffs as announced on Friday would come into play.
“I think the final result will be far lower than initially projected, especially concerning its duration,” said Chelsea Ye, senior analyst at metals research firm McCloskey.
The European Commission said it would make a strong case this week for the US to reduce or eliminate tariffs.
European Trade Commissioner Maros Sefcovic will meet US Trade Representative Jamieson Greer at an OECD gathering in Paris tomorrow, while commission technical teams will be in discussions with counterparts in Washington this week.
The commission, which oversees trade policy for the 27-nation European Union, said it was prioritising negotiations to resolve the conflict.
The EU currently faces 25pc tariffs on steel and cars and for Trump and “reciprocal” tariffs on most EU goods, which were provisionally set at 20pc for the EU but is being held at 10pc during a 90-day pause until July.
Meanwhile, the tariff shift was applauded by US producers of aluminium, used in transport, packaging and construction, who said the move would stop a “flood” of imports.
“For decades, subsidised foreign producers have hollowed out domestic aluminium manufacturing,” said Mark Duffy, president of the American Primary Aluminium Association.
Trading
Shares of US steelmakers climbed in early Wall Street trading, with Nucor, Cleveland-Cliffs and Steel Dynamics surging between 11pc and 24pc.
Shares of steelmakers fell in South Korea, which was the fourth-biggest exporter of steel to the US last year, behind Canada, Mexico and Brazil, according to American Iron and Steel Institute data.
South Korea’s Industry Ministry said in a statement that it had held an emergency meeting with officials from the country’s major steelmakers, including POSCO and Hyundai Steel .
Shares of POSCO and Hyundai Steel fell 3pc, while those of South Korean peer SeAH Steel Corp tumbled 8pc.
In Vietnam, steel companies Hoa Sen Group, Nam Kim Steel and Vietnam Steel dropped between 2.7pc and 3.4pc.
The 50pc tariffs will add to the challenges facing Korean steel exporters, which have refrained from sharply boosting exports to the US to avoid Washington’s scrutiny, despite rising US steel prices, an industry executive told Reuters.
“It will be a burden to exporting companies if there are no additional steel price increases in the US,” he told Reuters.
Steel and aluminium tariffs were among the earliest Trump imposed when he returned to office in January. Tariffs of 25pc on most steel and aluminium imported to the US went into effect on March 12.
South Korea, a major US ally, has called for an exemption from tariffs on steel, vehicles and others items, during talks with the US.
Seoul agreed in late April to craft a trade package by the end of the 90-day pause on Trump’s reciprocal tariffs in July, but it has been difficult for negotiators to make big decisions due to a political leadership vacuum ahead of elections today.
In late March, Hyundai Steel announced a plan to build a $5.8 billion factory in Louisiana in response to US tariffs, but the factory will not open until 2029. In April, Hyundai Steel’s bigger rival POSCO signed a preliminary deal to make an equity investment in the factory project.
In India, which relies heavily on the US for aluminium exports, industry experts also warned of a major hit.
“This is going to have a detrimental impact,” BK Bhatia, director-general at the Federation of Indian Mineral Industries, the country’s leading mining body, told Reuters.
“The US is the biggest market for Indian aluminium. Government has been negotiating so we are hopeful that with talks, the tariffs will come down.”
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