Final Thoughts

You could make the case that this approach has worked in the past. Section 232 tariffs of 25% on imported steel in 2018 encouraged billions of dollars of investments (and millions of tons per year) in new or expanded domestic steelmaking – and a lot of new coating capacity to go with it.

You could even make the case that South Korean steelmaker Hyundai floating a $6-billion sheet mill in the southern US stems from successful tariff policy across both the Biden and Trump administrations. (President Trump and former President Biden both opposed Nippon Steel’s acquisition of U.S. Steel. That might have played a role as well. But I digress.)

And at the end of the day, that’s one thing domestic trade policy should be aimed at – encouraging foreign investment in the United States.

Let’s say the steel tariffs worked. It was still a matter of years between when those tariffs were first imposed in 2018 and when new capacity came into the market. (And some of that new capacity is still being built.)

Will it work for everything else?

Does the same strategy work when we’re talking not just about the two industries initially targeted by Section 232 – steel and aluminum? I ask because there are some days lately when it seems like Trump is targeting everything. The president has threatened everything from imported steel and aluminum to Canadian lumber and French wine.

Let’s say Trump follows through with these threats. What’s the lag time between when the tariffs go into place and when, for example, a new automobile plant is built? And will consumers be willing to put up with any inflation they might have to endure in the meantime?

To be fair, President Trump has been preparing people for a rough patch.

“Tariffs are about making America rich again and making America great again. And it’s happening,” Trump said in a joint address to Congress in March.

“There will be a little disturbance, but we’re OK with that. It won’t be much,” he added.

Trump was right about the disturbance part. Just look at the stock market. Whether it’s a “little” disturbance might depend on how close you are to the blast radius of the latest tariffs.

Making news great again!

One thing is clear: This is not 2024 all over again. We watched prices drift lower throughout most of 1H’24. And then we sat at what felt like an interminable bottom for 2H’24. How many times could SMU write about prices not moving?

That’s not a problem in 2025. I never wake up in the morning and think, “It’s such a slow news day. How is SMU going to find enough to write about to keep the website humming?”

I’ve heard the tariffs compared to a carousel. Maybe because there are so many of them. (Wiley trade attorney Alan Price provided a good primer on them in his Community Chat today.) And they seem to rotate through Trump’s social feed and the new cycle.

There are the blanket tariffs of 25% that Trump has threatened against all imports from Canada and Mexico. There is the 20% already applied to China. These are in theory necessary because of a national security emergency stemming from illegal fentanyl and illegal immigration.

Then there are the Section 232 tariffs of 25% – also based on national security grounds – on all imported steel and aluminum. And the Trump administration is considering rolling out Section 232 tariffs on copper as well.

Let’s not forget the reciprocal tariffs that could go into effect as soon as April 2. We’ve even got potential Section 301 fees that could be applied to Chinese-built ships carrying imports to US ports. And then there are potential “sectoral” tariffs targeting specific industries – on everything from microchips to pharmaceuticals.

What’s next, executive orders putting tariffs on individual companies? That’s just me being hyperbolic, I think. (That said, we had a bill introduced to change Greenland’s name to Red, White, and Blueland – so the line between a joke and real-world policy isn’t always clear.)

Tariffs bend the space-time continuum

And then there is the matter of timelines. Or lack thereof.

Just before Thanksgiving, Trump threatened (on Truth Social) to impose blanket tariffs on all imports from Canada and Mexico once he was inaugurated on Jan. 21. He waited until Feb. 1 to announce the tariffs. And then on Feb. 3, he delayed them for a month.

At the end of February, it was more of the same. But Trump insisted he was serious this time – that he really would hit Canada and Mexico with tariffs. And on Tuesday, March 4, at 12:01 am ET, he imposed the 25% tariffs… And then on Thursday, March 6, he delayed them for a month (again).

Sure, the flip-flopping (or negotiating, depending on how you look at it) makes for good headlines. But what if you were unlucky enough to, say, enter material on Wednesday, March 5, when the 25% duties were in effect and before the delay? That’s a real-world consequence.

A week later, on March 11, it was another dose of tariff craziness. In response to Trump’s tariff threats, Doug Ford – the premier of Ontario (a premier of a Canadian province is like the governor of a US state) – retaliated. He applied a 25% surcharge on electricity Ontario sells to the Michigan, Minnesota, and New York.

Trump then threatened on Truth Social (notice a theme here) to retaliate with a 25% tariff on all Canadian imports – which, combined with Section 232, would have brought Canada’s total tariff to 50%.

What happens when a barge collides with a social media platform?

Again, this stuff has real-life consequences. Buyers in some instances scrambled to cancel orders waiting to cross the border – because a 50% tariff is a lot more than a 25% one. But then a few hours later, there was a truce – and Canada’s tariff went back to 25%. And there was a scramble to un-cancel those canceled orders.

What kind of look is this for US industry? Let’s say you’re an investor, and you think (rightfully) that there are good opportunities in the domestic manufacturing sector. Is price volatility a big risk in steel? Yes. Are there tools to help mitigate that risk? Also, yes.

But can investors swallow this kind of policy uncertainty? How can you offset policy risk when it travels at the speed of social media in an industry that measures lead times in weeks and where material moves at the speed of trucks, trains, and barges?

Here come the (imported) tons?

Then there is the matter that 25% isn’t such a big deal for a lot of the world.

Getting hit with Section 232 tariffs of 25% was a big change for Canada, Mexico, and the EU – who had previously been mostly or entirely exempt from the tariff. It was also a big change for nations such as Argentina, Brazil, and South Korea, which previously had been subject to a quota.

But it wasn’t a change for the rest of the world, which has been subject to a Section 232 tariff of 25% since 2018. Getting hot-rolled from Egypt? Cold-rolled from Vietnam? Galvanized for Indonesia? Or maybe rebar from Algeria? Nothing has changed for those countries. They were subject to the 25% tariff. They still are.

Maybe you’re getting sheet, plate, or OCTG from South Korea. Perhaps slab from Brazil. With the quota gone, there is nothing to limit their volumes. And you might get a competitive offer even after factoring in the 25% tariff.

Why? Because there has been real panic buying as US buyers have sought to get ahead of the next round of tariffs or mill price increases. It resulted in a torrid pace of US price gains.

Too far, too fast?

SMU’s hot-rolled coil price stands at $950 per short ton (st) on average. That’s up 25% from $760/st a month ago. And it’s up 41% from $675/st at the beginning of the year, according to SMU’s pricing records.

We saw huge gains like this in early 2021, when demand snapped back after the early days of the pandemic. But there are some key differences between now and then. In January 2021, service centers had only 40 days’ supply of sheet on hand. That was shorter than lead times, and so there was a real risk of running out of steel to sell.

In January 2025, in contrast, service centers had 66 days’ supply of sheet. That’s the highest total for any January since we started collecting inventory data in 2019. (Fwiw, we’ll release February inventory data to our premium subscribers on March 14.)

Don’t get me wrong, prices abroad are up too. But not by as much as in the US. The result: Some of you tell me you’re getting approached with more imports than ever. And the prices are competitive not just in coastal areas where imports typically play a bigger role but also delivered into the Midwest.

Let’s say that foreign material is rolled in April, shipped in May, and arrives at US ports in June/July? What happens to US prices when domestic lead times get closer to summer? Could we be in for a sharp correction? Or could Trump take 232 tariffs up to 50% before the ships arrive?

Does the tariff roller coaster ever stop?

I wrote back in January that globalization hadn’t worked as planned for places like Pittsburgh, Weirton, W.Va., and Youngstown, Ohio. Maybe a little corrective regionalism or “everyone goes their own way-ism” was called for.

Is that what we’re getting now? Sure, I realize a little pain – as Trump alluded to in his speech to Congress – might be necessary. And NAFTA sure caused a lot of pain when it was implemented in 1990s. Remember the “Battle of Seattle” in 1999?

Whatever comes next, I don’t think a carousel is the right metaphor anymore. Lately, it feels like the carousel has turned into a roller coaster. And Space Mountain at that. You can’t see where the next turn or drop is going to be.

Oh, and after you strapped in and left the station, there was an announcement that the roller coaster would continue indefinitely. I don’t know about you. But I wish I had known that before I ate a full lunch (and washed it down with a beer).

Enjoy the premium life

Some of our best data – like the service center inventory figures that we’ll release on Friday – is available only to premium subscribers. If you’d like to upgrade from executive to premium, please reach out to SMU senior account executive Luis Corona at luis.corona@crugroup.com.

And in the meantime, thanks to all of you for your continued business. We really appreciate it.