US Imposes 25% Tariff on Steel & Aluminium Imports, Impacts Global Trade

The USA has imposed a 25% import tariff on steel and aluminium products worldwide, aiming to boost domestic production. Unlike the 2018 tariff hike, which saw exemptions for key trade partners, this order revokes all previous exemptions, impacting major steel-exporting countries.

Despite having sufficient steel production capacity, low capacity utilization and high production costs have kept the US dependent on imports. Over the past four years (CY21–24), US steel prices were around 50% higher than China’s, and 23%–38% higher than European and global export prices, attracting imports. Canada, Brazil, and Mexico remained top steel exporters to the US in 2024, along with Asian countries like South Korea, Japan, Taiwan, China, and Vietnam.

The tariff hike could redirect surplus steel production to markets like India, which is experiencing strong demand. Hitesh Avachat, Associate Director, CareEdge Ratings, noted that Indian steel demand is expected to grow at 8% CAGR over the next 2-3 years, driven by infrastructure and construction. However, the domestic industry may face further margin pressure from cheaper imports.

Aluminium manufacturers may feel a greater impact, as exports account for 40% of India’s primary aluminium output. However, India could benefit from its low-cost production advantage, supported by high-quality bauxite reserves.