Final Thoughts

In some respects, it shouldn’t come as a surprise. Trump had been threatening 25% tariffs on Canada and Mexico as well as 10% tariffs on China since November.

And on Thursday, he cited a familiar list of complaints – chief among them: immigration, drug trafficking, and trade deficits.

Trump said the tariffs “may or may not rise with time,” according to media reports.

Mexico had already threatened to retaliate, as had Canada. But even before Trump’s remarks on Thursday, there were questions about whether Canada had any viable alternatives to a US market it relies so heavily upon for its exports.

Note, too, that Trump said the tariffs could be broad – including things like lumber and oil from Canada.

The Feb. 1 camp wins

From one group of folks, I’d heard that Trump might not wait until Feb. 1 – the date he threatened to place tariffs on China, Canada, and Mexico. They said he could act as soon as this week. Turns out those folks were more or less correct.

There were those who didn’t think anything would happen before April 1. That’s the deadline for Commerce, Treasury, and USTR to submit key reports on “America First Trade Policy” to President Trump.

Some of the April 1 folks also noted that Trump didn’t yet have enough confirmed Cabinet members to do anything sweeping. Also, if the president opted for broad tariffs, how, in practice, would you collect them unless you staff up Customs in a huge way?

Those are all sensible reasons for a delay. But logic and precedent are probably not the best tools for predicting what a Trump White House will do.

What comes next?

Some, citing Trump’s extensive comments about tariffs on Monday in Miami, found support for the idea that the president might not only bring broad tariffs but also more narrowly focused measures on steel and aluminum.

And if tariffs and Section 232 weren’t on your radar, comments by Nucor CEO Leon Topalian and SSAB CEO Johnny Sjostrom during their quarterly earnings call should have put them there – especially when it comes to Canada and Mexico.

There had been disagreement earlier in the week over whether Trump would go to 25% all at once. Maybe he’d start at 5% or 10% and then ratchet it up from there? The goal – in addition to the widely publicized talk on immigration and drugs – might also be to get Canada and Mexico to the table to review USMCA in 2025 instead of waiting until 2026, when the agreement is slated for review.

Perhaps. But we now know that 25% is the starting point. And that 5-10% might have been wishful thinking.

Some had hoped that Trump would hit the pause button on any tariffs on Canada and Mexico because of concessions they’d already made on immigration, border security, and fentanyl. Howard Lutnick, Trump’s nominee to be Commerce Secretary, suggested as much in his confirmation hearing on Wednesday. Well, that’s what some of you took away from that hearing. Others came to the opposite conclusion. Lutnick, for example, channeled his inner Trump and said the US was being treated “horribly” by its allies.

It turns out the latter camp was correct. But, frankly, there was enough in his remarks to justify whatever you thought Trump might do next.

A Section 232 overhaul?

Some of you have told me that, in addition to broad tariffs, we could see an overhaul of Section 232.

Perhaps. I could see Trump – no fan of President Biden’s policies and not overly concerned about upsetting traditional US allies – repealing the tariff-rate quotas (TRQs, or soft quotas) that the Biden administration negotiated with the European Union, Japan, and the United Kingdom.

That would cause a political scene. But a bigger impact on steel supplies and steel prices might come if Trump acts on Section 232 quotas. Recall that South Korea, Brazil, and Argentina agreed to (or were subject to) quotas in exchange for exemption from Section 232 tariffs of 25%.

If you don’t like those quotas, you might note that they were initially set based on import trends from 2015-17. And you might also note that the world has changed a lot over the last decade. Depending on who you talk to, you might hear that those quotas will be reduced, eliminated, and replaced with tariffs – or even that tariffs could be extended to raw materials as well.

I remember when it was considered extreme – unthinkable even – that tariffs might be applied to semi-finished goods like slabs. Then, shortly after Section 232 was rolled out in March 2018, Commerce Secretary Wilbur Ross held a press conference. I asked if Section 232 applied to slab. Indeed, it did, he said.

So much for that sacred cow. Maybe raw materials are the next sacred cow in the crosshairs? I mean, sure, Brazil is promoting alternatives to the US dollar as the world’s reserve currency. But tariffs could never be applied to Brazilian pig iron, given how much EAFs in the US depend on it, right?

By the numbers

The US imported 26.8 million short tons (st) (24.3 million metric tons) of steel in Jan-Nov 2024, according to Commerce Department figures. (Final December data has not been added yet.)

A lot of it was from some of the countries mentioned above. About 6 million st came in from Canada. About 4.5 million st from Brazil. About 3.3 million st from Mexico. Roughly 2.6 million st from South Korea. And approximately 1 million st from Japan. So that’s nearly two-thirds of the steel the US imports that could be touched by tariffs or changes to Section 232.

I didn’t mention the 1.2 million st that comes in from Vietnam. That’s because most of it is coated and so could be zapped by the AD/CVD case filed against 10 nations – including Vietnam. (Reminder that prelim CVDs are expected by Feb. 3 and prelim ADs by April 3. An updated timeline is here.)

Sure, sheet inventories are high. But that provides only so much of a buffer. The kind of sweeping trade actions that we’re about to see could radically alter the domestic steel landscape. Plate inventories, meanwhile, are relatively lean. And plate was already more protected with AD/CVDs than sheet. So that could be a particularly interesting space to watch.

2017-18 PTSD

All of this feels a lot like reporting on Section 232 in Trump’s first administration. For those of you who’ve been at this for a while, remember the spring and summer of 2017?

Section 232 was supposed to be coming any day, any minute. Case in point: I was working at Fastmarkets at the time. We had a senior Commerce official scheduled to speak at Steel Success in June 2017.

There were rumors that Section 232 might be announced right then and there. We probably hadn’t had as many mainstream reporters at the event since Arcelor and Mittal had dueling press conferences at the event in the early 2000s.

Then the Commerce official stood up at the podium. Said some platitudes about the importance of steel to the United States. And… that was it. The room practically gasped. USW President Leo Gerard seemed positively angry.

But then chatter after the conference was that Section 232 would come later in June. When that didn’t happen, speculation mounted that Trump would announce something around July 4 – to declare independence from imports!

July 4 came and went. Nothing happened. Worse, enough people had become so convinced that Section 232 was right around the corner that they went out and took positions and built inventory – during what is often a slow time of year. That inventory overhang was a drag on the market in the back half of 2017 when questions started to arise about whether Trump had forgotten about his promises to steel.

As we all know now, Section 232 came roaring back into the headlines in 2018. Commerce Secretary Wilbur Ross had mapped out three options for Trump – let’s say X, Y, and Z. The president went with options Q and 7: blanket tariffs of 25% on steel and 10% on aluminum.

Personally, I didn’t think we would be waiting for that long this time around. The drumbeat was just too loud. The tariff guessing game played out over about a year in Trump 1.0. In Trump 2.0, it looks like it will have taken a little less than two weeks.

Tampa Steel Conference

I’m looking forward to seeing so many of you next week at the Tampa Steel Conference, which we organize with Port Tampa Bay. The event kicks off with a networking reception on Sunday evening.

More than 550 people have registered to attend. That means we’ve beaten last year’s record – and in what has been a tougher steel market.

Clearly, there will be a lot to talk about, whether that’s Trump and tariffs or how demand across various end markets is shaping up in 2025.

It’s not too late to join us. You can see the full agenda, companies attending, and register here.

We hope to see you there!