What Steel and Aluminum Tariffs Could Mean to Steel King and How Those Tariffs Could Impact Everyday Business
Posted on Feb 26, 2025
A number of people have been reaching out looking for comments on President Trump’s recently announced 25% tariffs on all steel and aluminum imports into the United States and what that means to Steel King as well as how those tariffs could impact everyday business.
Cheers, Jeers & Confusion
When it comes to tariffs the impact and value of this type of executive order really depends on where you sit in our modern-day supply chain. The United States steel making market and its consumers have undergone a significant transformational evolution since President Trump’s first round of trade tariffs were put into place in 2018.
The industry weathered tariff driven price spikes in 2018, followed by market retracements in 2019. The global pandemic drove dramatic mill consolidation in the U.S. market as Severstal (Russian owned) & Arcelor Mittal (EU) sold their mills to Steel Dynamics and Cleveland Cliffs. This consolidation, followed by the reopening of production and the reemergence of U.S. consumers drove elastic demand of Hot-Rolled steel (HRC) following the pandemic. HRC rose by 173% over less than a 12 twelve-month period.
Back in the Fall of 2020, we made the call that the metals market was undergoing a significant transformation that would absolutely break past cyclical trends. In 2021 Timna Tanners, a well-known steel analyst for Wolfe Research coined the phrase “Steelmadeddon” to describe the pending collapse in steel pricing as U.S. mills all entered a modern-day metals arms race to build new domestic steel capacity.
Since 2021 the five remaining major sheet steel mills: Cleveland-Cliffs, North Star Bluescope Steel, Nucor, Steel Dynamics, and U.S. Steel have all added significant amounts of capacity to support anticipated demand.
Cheers
Cliffs Chairman, President, and CEO Lourenco Goncalves in a recent report stated that, “A level playing field in steel will set the foundation to usher in a new golden era and a manufacturing renaissance will make America strong again.”1 Other CEOs across the Big Five mills have shared similar views. It is undeniable about the importance of investing in good paying United States jobs to protect our country’s national security.
Before becoming President at Steel King, I was responsible for building out our company’s supply chain. We operated under the motto of building a supply chain that’s “Built to Deliver”. This motto meant that we would only partner will service centers and mills that share our values. This also meant that the steel we purchase for our SK2000 uprights and beams, SK3000 structural racking, NexCaliber Structures platforms, safety guarding products and custom material containers is all proudly “Made & Melted” in the United States. We share in the idea that innovation and a strong United States steel industry are critical to the long-term success of our economy and we’re proud to stand with our supplier partners.
Jeers
On February 9, 2025, President Trump announced that the Department of Commerce will impose 25% tariffs on all steel and aluminum imports into the United States.
“President Donald Trump’s tariffs, both implemented and just threatened, are causing ‘chaos’ for the U.S. automotive industry”, according to Ford Motor CEO Jim Farley.2
While these tariffs could help with the finances of steel mills, they will also increase costs for all manufacturers that use steel or aluminum regardless of the country of origin for the metal. In fact, the free market is already making moves to drive metals costs higher.
U.S. Midwest Steel Domestic Hot-Rolled coil steel futures for May from CME Group have already seen a 12.6% increase. Steel futures markets often project market momentum as commodity trades move in and out of the market while indices like the CRU (Commodities Research Unit) or AMM (American Metal Market) are more trailing in nature based on actual transaction prices.
While tariffs have value and can serve as an effective negotiating tool they also act as a tax on the consumers through increased pricing. This unofficial tax is often a regressive one when lower income earners will need to spend a larger portion of their paychecks to purchase goods. It’s not out of the question that we could also see wage pressures reignite later in the year if consumer inflation becomes sticky again. Costs and prices will likely be in a micro-cycle that trends towards the upside if policy-based saber rattling actually translates into sustained tariff against some of our closest trading partners/allies.
Confusion
There’s immense power in statements being made by the President. And, at times, those statements can drive confusion, or as my teenage daughter might say, “Dad I’m confuzzled.” We’re all truly working through a confusing trade puzzle to do what’s best for our businesses and our customers.
It’s no secret that businesses and consumers don’t have fond affection for uncertainty. Uncertainty leads to paralyzed markets, and paralyzed markets transition to delayed business decisions as CEOs and Boards try to determine how to best leverage their capital for future returns. Is President Trump serious about inflicting a sustained 25% tariff across the board on steel and aluminum or is this part of a broader strategy of excising unfair trade practices? While “The Art of the Deal” was coined by President Trump, only history will tell who’s going to receive the best deal out of these tariff wars.
If history is a guide for us at Steel King, we know that true partnerships are more than just key buzzwords. We know that partnerships are defined by the actions we take every day. It’s less about the “Art of the Deal” and more about the “Art of Intentionality” to serve our customers.
In the coming days and weeks, be sure to follow Steel King on social media as we work hard to keep you informed on this rapidly evolving situation.
1: Trump tariffs a boon for stock of local steel company Cleveland-Cliffs
2: Ford CEO says Trump’s tariffs are causing ‘chaos’ in auto industry
Certain statements contained in this article are “forward-looking statements” that involve risks and uncertainties which we expect will or may occur in the future and may impact our business, financial condition and results of operations. The words “anticipate,” “believe,” “expect,” “intend,” “project,” “may,” “will,” “should,” “could” and similar expressions are intended to identify those forward-looking statements. These forward-looking statements reflect the Company’s best judgment based on current information, and, although we base these statements on circumstances that we believe to be reasonable when made, there can be no assurance that future events will not affect the accuracy of such forward-looking information.