The United States is primarily importing steel from Canada, but that’s about to get pricier due to President Trump’s planned tariffs this week. For Stephen Capone, who heads Capone Iron Corporation based in Rowley, Massachusetts, this is a welcomed change. His company, specializing in products like steel stairs and handrails, employs approximately 100 people. For quite some time, Canadian companies have been underselling the market in New England with inexpensive steel offerings, making it challenging for local businesses to secure contracts.
“No matter how low our bids are, they can always outbid us,” Capone expressed. “They’re wrecking our market.”
While many companies are concerned about these tariffs, fearing they will lead to increased costs and potential countermeasures from other countries, there is a segment within the business community that is supportive. Ford Motor’s CEO, Jim Farley, previously voiced his concerns, warning that tariffs might seriously harm the U.S. automotive sector, with retailers cautioning that consumers would face higher prices.
Nonetheless, President Trump’s trade policies resonate with some sectors, especially those that view foreign competition as a factor undermining their industries. U.S. steel and aluminum companies, for instance, argue that foreign competitors have an unfair advantage due to various subsidies. Executives maintain that well-implemented tariffs encourage domestic investment.
Recently, Trump temporarily paused broad tariffs he had set on Canadian and Mexican imports, but the tariffs targeting steel and aluminum remain. Scheduled under the national security clause, Section 232 of the Trade Expansion Act, they’ll hit this Wednesday.
“The mandate President Trump received was clear: protect American manufacturers and workers, especially vital sectors like steel and aluminum,” noted Kush Desai from the White House. This will see steel and aluminum imports face a 25% duty from countries, including Canada and Mexico.
Initially, during Trump’s first term, Section 232 tariffs on steel and aluminum were enforced, with Canada and Mexico later obtaining exceptions when a new trade agreement came into effect in 2020. Jesse Gary, Century Aluminum’s CEO, was in favor of the aluminum tariffs initially and believes reinstating them will close previous loopholes, enabling U.S. investments to flow and production to increase domestically.
Philip Bell, of the Steel Manufacturers Association, highlighted that recent years saw a rise in steel imports. He pointed out how Mexican firms imported inexpensive Chinese steel, slightly modified it, and then shipped it into the U.S., passing it off as Mexican-made.
The Biden administration took action last year, slapping a 25% tariff on Mexican steel that underwent processing outside of North America. Trump’s tariffs, though, broaden this scope, targeting all steel from Mexico.
President Trump’s approach sends a strong signal to trade partners about getting serious about trading relationships, remarked Bell. Meanwhile, Canadian steel producers dispute claims of flouting trade regulations. Catherine Cobden of the Canadian Steel Producers Association asserts their commitment to a fair North American steel market and denies contributing to global overcapacity.
However, while these tariffs could give U.S. steel and aluminum producers more control over the domestic market, the key concern revolves around whether this will trigger significant investment to boost capacity. After Trump’s initial tariffs, the steel industry in the U.S. did expand in some parts. Timna Tanners from Wolfe Research points out that U.S. companies have room to add capacity, potentially substituting imported steel in various sectors. Yet, there’s a caution not to over-expand and flood the market, potentially driving prices down.
Tanners elaborated, “Mills aren’t rushing to ramp up too much production as they prefer maintaining higher prices.”
According to the American Iron and Steel Institute, last year saw finished steel imports capturing around 23% of the market, with an even greater reliance on aluminum imports. Historically, American producers dominated primary aluminum manufacturing, or aluminum derived from raw materials. Nowadays, China is the largest producer.
The Economic Policy Institute credits the Section 232 tariffs for revitalizing primary aluminum production during Trump’s first tenure. Century Aluminum, the top primary aluminum producer in the U.S., intends to build a new smelting facility—the first such plant in the U.S. in 45 years—thanks to up to $500 million in grants from the Biden administration.
When asked about the impact of ongoing reviews of grants under the Inflation Reduction Act, Gary sounded optimistic, asserting that their project aligns well with the current administration’s goals. This new facility spells 5,500 jobs during construction and 1,000 ongoing full-time roles.
Yet, Trump’s latest tariffs have created divisions within the U.S. aluminum sector. Many American companies maintain operations in Canada and are therefore impacted by these tariffs. Charles Johnson, the Aluminum Association’s president, mentioned that while certain aspects of these tariffs are supported, a reliable metal supply from Canada is necessary to sustain current U.S. jobs and investments.
If these tariffs drive up steel and aluminum costs, businesses reliant on these materials might either raise prices for their consumers or seek alternatives.
Labor unions are another source of support for Trump’s tariffs, although they’ve occasionally criticized the manner of their imposition. The United Steelworkers, in particular, lament the targeting of Canada emphasizing their fair trade practices.
David McCall from the United Steelworkers advised, “We urge the President to differentiate between trade violators and reliable allies who bolster our national and economic security.”
From his perspective, Capone believes the steel tariffs should be even more stringent, as they currently allow Canadian companies exceptions if using steel sourced from U.S. mills. He argues that fabricating steel into products like stairs involves substantial labor, which should be more adequately reflected in these tariffs.
Capone contends, “The 232 tariffs seem to favor the mills over the fabricators.”
