Steel at the Heart of New Trump Trade War

Washington: US President Donald Trump has reignited his aggressive trade policies with a fresh wave of tariffs targeting steel and aluminum imports. The new 25% levy, set to take effect on Monday, aims to shield American steel manufacturers from global overproduction and price fluctuations. However, the move is expected to further strain international trade relations and disrupt an already volatile steel industry.

Renewed Tariffs and Strategic Impact

Returning to the White House for a second term, President Trump is doubling down on his protectionist trade agenda, echoing the tariffs he imposed during his first tenure. The new trade barriers are designed to curb what he perceives as unfair competition from foreign steel producers, particularly in China and Europe.

Global steel production reached 1.89 billion tonnes in 2023, with China contributing more than half at 1.02 billion tonnes, according to the World Steel Association. The US, by contrast, produced just 81 million tonnes domestically while importing 26.4 million tonnes, making it the second-largest importer of steel after the European Union.

Key Exporters to the US

According to the US Department of Commerce, Canada was the largest exporter of steel to the US in 2024, shipping 5.95 million tonnes. Brazil followed with 4.08 million tonnes, while the European Union exported 3.89 million tonnes. Other significant contributors included Mexico (3.19 million tonnes) and South Korea (2.5 million tonnes). Despite ongoing concerns about China, the country exported just 470,000 tonnes to the US.

The Overproduction Crisis

The global steel industry is facing a structural crisis driven by surplus production, which has caused prices to plummet. Analysts estimate an excess of nearly 500 million tonnes, much of which is attributed to China’s aggressive manufacturing output.

A European steel industry expert, speaking on condition of anonymity, noted that while US and European production capacity was traditionally balanced to meet domestic demand, Southeast Asia has seen massive overproduction. Planned steel factories in the region are expected to add another 100 million tonnes of capacity, with Chinese companies accounting for 80% of this expansion.

Moreover, Beijing has long been accused of indirectly subsidizing its steel industry, creating artificially low prices that undercut competitors in the US and Europe. These challenges have placed significant pressure on American and European steel manufacturers, leading to major shifts in the industry.

Economic and Industrial Ramifications

The instability in global steel markets has had tangible consequences. US Steel, one of America’s largest producers, recently became the target of a takeover bid by Japanese conglomerate Nippon Steel—a move that was blocked by former President Joe Biden. Similarly, Germany’s ThyssenKrupp announced massive layoffs in response to declining steel profits and rising competition.

Steel remains a foundational component of industrial economies, playing a vital role in construction (which accounts for over 50% of its usage), automobile manufacturing (12%), and key infrastructure sectors such as railways, defense, and energy. Notably, steel is crucial for the production of wind turbines, making it a necessary material for the global transition to renewable energy. It is also used in data centers, which are integral to the development of artificial intelligence.

The Push for Green Steel

Despite its importance, the steel industry is one of the largest emitters of greenhouse gases due to its reliance on coal for smelting iron ore. In response, manufacturers have been exploring alternative methods to reduce their environmental impact, including increased recycling, electric furnaces, and hydrogen-based smelting processes.

In Europe, significant investments were planned to decarbonize the steel industry. However, the looming threat of a US-EU trade war, combined with surplus production and declining steel consumption in Europe, has placed these initiatives on hold.

A Trade War with Global Consequences

Trump’s latest tariffs are expected to escalate tensions with key US trading partners, particularly in the European Union and Asia. With the global steel industry already grappling with economic uncertainty, the new trade restrictions could trigger retaliatory measures, further disrupting supply chains and industrial output worldwide.

As the world braces for the impact of these tariffs, the question remains: will protectionist policies revive America’s steel industry, or will they fuel another cycle of economic and geopolitical conflict?