US steel buyers to feel impact of 25% import tariffs?

The North American steel market is braced for the effect of 25% import tariffs after the US government introduced the trade measures on key trade partners Canada and Mexico from today (March 4).

Canada and Mexico are the first and third largest steel exporters to the US, respectively, and the two countries have been a key focus of President Donald Trump’s trade policies since the start of his second term.?

On the evening of January 20, he announced plans to impose a 25% tariff on all US imports from Mexico and Canada starting February 4. However, at the last minute, these tariffs were postponed by one month due to border concessions from both countries. Meanwhile, a 10% tariff on Chinese goods was implemented on February 4.

Now, the threat of 25% tariffs has been acted upon, along with an additional 10% tariff on all imports from China. The move prompted an immediate reaction on the US stock exchange. Yesterday (March 3), the S&P 500 share index closed 1.8% lower after its worst session of the year. The effect on the region’s steel prices and supply chain will also be marked.

Certain Canadian products will impact supply

According American Iron and Steel Institute data, imports account for 23% of US finished steel consumption. Imports from Canada and Mexico represented 8.6% of US consumption in 2024, with and Canadian imports alone accounting for 6.3%. ?

Canada is the largest steel exporter to the US, shipping nearly six million tonnes in 2024, accounting for 23% of total US steel imports. The top imported steel products include sheet, plate and wire rod. Canada exported 927,000 tonnes of hot dipped galvanised sheet and 550,000 tonnes of cold rolled sheet, representing 34% and 38% of total US steel imports for those products, respectively, according to the US Commerce Department.

However, Canadian-origin imports of hot rolled sheet, plate and wire rod are of greater concern. The US imported 910,000 tonnes of hot rolled sheet and 604,000 tonnes of continuous mill plate (plate in coils) from Canada, last year, representing 48% and 60% of total US steel imports in those categories. The recent addition of domestic capacity in sheet and plate production will help cushion some of the supply shock for US steel buyers, but near-term disruptions are expected.

More than 450,000 tonnes of wire rod were imported from Canada in 2024, making up 46% of total US wire rod imports. These imports have become even more critical to domestic supply following the 2024 idling of Liberty Steel’s wire rod production in South Carolina and Illinois. According to worldsteel data, the US produced 2.4 million tonnes of wire rod in 2023, but that figure has since declined significantly due to these plant closures.

Steel prices have already jumped

Since the start of the year, MEPS International’s US prices for hot rolled coil, plate and wire rod have experienced the largest movement. Nucor has raised plate prices by USD260 per short ton, hot rolled coil by USD110, and wire rod prices by USD100 since mid-January. In February’s International Steel Review, MEPS assessed price increases of 15.4% for hot rolled coil, 12.5% for plate and 11.5% for wire rod, with further increases expected in the coming months.

The most significant steel import from Mexico is slab, with over one million tonnes imported during 2024. However, this accounts for only one-fifth of total US slab imports.?

One product that should see minimal impact from the new Canadian and Mexican tariffs is stainless steel, as these two countries accounted for only 7.7% of US stainless imports in 2024. While Canada is a major exporter of nickel, US stainless production primarily relies on stainless scrap as its primary input.

The risk of additional tariffs should not be overlooked. The reinstatement of Section 232 tariffs, imposing a 25% duty on steel and aluminium imports from all countries, is scheduled for March 12. This will eliminate all exemptions and exclusions implemented since 2018. Additionally, reciprocal tariffs by Canada and Mexico are set to take effect on April 2. President Trump has previously stated that all tariffs will be cumulative. If these additional tariffs are enacted, they will further restrict supply and drive steel prices higher in the near term.

• Insight from the United States steel market is included in MEPS's?International Steel Review.?The monthly publication?provides steel prices, price indices, market commentaries and six-month price forecasts from the US, Canada, China, Japan, South Korea and Taiwan, as well as seven European steelmaking states.?Contact MEPS?for subscription details.?