Looming Trump Tariffs Make U.S. Steel Too Expensive at Home

U.S. President Donald Trump’s threatened steel tariffs that don’t kick in until March 12 are impacting U.S. buyers, who already are seeing American-made metal cost more than imports.

The benchmark price for domestic steel touched more than $900 a ton this week, up almost one-fourth this year, in anticipation of the imminent 25% levy on foreign supplies. That surge means U.S. prices have now moved above par with imported steel, according to people active in the market who asked not to be named discussing non-public information.

“What we’re seeing so far happen is mills capitalize on the tariffs and uncertainty of tariffs, and they’ve been able to raise prices such that, at $900 a ton, it’s more than what would happen to price with an actual 25% tariff implemented,” Timna Tanners, an analyst at Wolfe Research, said during a telephone interview February 28. “This isn’t the desired outcome Trump has articulated.”

Metal shipments are pouring into the U.S. from all over the world, including cargoes from Egypt, Algeria, Malaysia, Brazil and Vietnam, according to a person familiar with the flows. The influx comes amid relatively anemic U.S. steel demand, as high borrowing costs make it expensive for buyers to move ahead with projects in everything from construction to appliance manufacturing.

Trump earlier this month ordered a 25% tariff on steel and aluminum imports, and in the process announced he would rescind all existing country-level exemptions. The specter of a protectionist wall emboldened domestic steelmakers like Nucor Corp., Cleveland-Cliffs Inc., United States Steel Corp. and Steel Dynamics Inc. to raise prices.

As recently as five weeks ago, a ton of steel was selling for less than $700. But by this week, domestic producers were quoting their customers prices as high as $1,000, according to people familiar with the situation — levels not seen since the beginning of 2024. The conundrum is that tariff threats have raised prices even as demand remains unchanged. 

Domestic hot-rolled coil, the benchmark steel product, is 23% more expensive than imported supplies, researcher Steel Market Update said this week. 

Meanwhile, some Canadian and Mexican steelmakers are telling customers they are refusing new orders. The measures have put Algoma Steel Group Inc.’s order books under “extreme pressure,” said chief executive officer Michael Garcia.

Canadian steel producers have little choice but to keep selling into the U.S. while global oversupply of the material constrains demand in other markets. The industry is more likely to pass higher costs onto customers than divert shipments elsewhere, said Catherine Cobden, president of the Canadian Steel Producers Association. Shipments to Europe or beyond are too expensive for Canadian steelmakers, she noted. 

“In a context of over-capacity, where there’s too much steel being dumped in everybody’s market, it’s very difficult to shift markets,” Cobden said during an interview. 

Canada’s steel business is almost exclusively dependent on the U.S., which brings in the bulk of its foreign imports from its neighbor to the north. The industry feeds U.S. automakers and the construction sector with high-grade material. U.S. consumption of steel totaled about 93 million tons in 2023, according to data from the U.S. Geological Survey, with net imports accounting for 13% of that demand. 

Canada’s steelmakers sell less …