Raw Material Prices

Trump's tariffs could have unforeseen impacts on ferrous raw materials

April 8, 2025

The imposition of reciprocal tariffs by President Trump has rattled virtually every market. This policy has some advantages for the steelmaking sector. But there may be some disadvantages that might not have been considered, especially for EAF producers of flat-rolled steel.

The reciprocal tariffs on various countries could affect the costs US-based steelmakers incur for certain raw materials such as imported ferrous scrap, pig iron, and direct-reduced iron/hot-briquetted iron (DRI/HBI). Let’s take a look at the potential consequences these tariffs could have for the ferrous industries.

Imported ferrous scrap

The tariffs on scrap will have the least damaging effect since the US does not import a great deal of scrap from the tariffed countries.

The vast majority of US ferrous scrap imports come from Canada and Mexico. Ferrous scrap from these two nations will not be tariffed, at least for now. Had they been, the scrap supply for several mills in border states would have been threatened, thereby raising the general scrap market price levels.

DRI/HBI

US steelmakers import a great deal of DRI/HBI from foreign production centers. Almost all of it comes from mill-owned plants located in Trinidad. According to the reciprocal tariffs announced on Trinidad, these shipments will cost an additional 10%.

Since this production is not merchant material, we do not know the base price of the DRI. But based upon the prevailing prices of HBI imports and the price of pig iron, the extra cost should be around $30 per metric ton (mt).

Imported basic pig iron

Tariffs on pig iron will have the most dramatic effect on production costs of steel that require pig iron in their EAF-melt charges.

Our main trading partner for pig iron is Brazil. That’s because Russian material has been sanctioned and Ukrainian supply has been limited following Russia’s invasion of Ukraine and the ensuing war.

If Brazil is subject to a 10% tariff, then based upon recent prices, $45/mt would be added to current costs.

If implemented in April, new bookings could rise to $495/mt FOB Brazil from $450 with $25/mt in freight to the US.

Imports from India and Indonesia would incur much higher tariffs, essentially cutting off shipments from these locations.

Ukrainian material would also be subject to a 10% tariff, despite the increased costs of shipping their pig iron to the US. There was no mention of tariffs against Russia. But, again, war-related sanctions exist for these products for now.

The US foundry industry could also be affected by tariffs on pig iron. The foundry sector imports specialty pig iron products from Brazil and South Africa. Products like foundry (Bessemer) pig iron, nodular pig iron, and RSA Sorelmetal may face tariffs of 10-30%.

Fog of tariffs

It should be noted until we are provided with the actual documentation of the enactment of these tariffs, the potential negative consequences are not an entirely sure thing. However, there is a strong likelihood there will be some pain for the steel and iron sectors.

The US Commerce Department and two major domestic EAF steelmakers did not respond to requests for comment on record for this article. A senior executive in the Brazilian ferrous trade said the 10% reciprocal tariff for Brazil applied to pig iron.

Stephen Miller

Stephen Miller started his career in the scrap metal industry in 1978 at Luria Brothers in Cleveland. Over the last 40+ years, he has worked in all capacities in the trading business. He has had positions in both domestic and international scrap trading. In addition to scrap, Miller was at the forefront of the pig iron trade and established a pig iron distribution company under the name of Ferrosource, Inc. Most recently, Miller has concentrated on the scrap export market and regularly does consulting for several companies in the industry.