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Shares in European and Asian steelmakers declined after U.S. President Donald Trump announced plans to introduce 25% tariffs on all steel and aluminum imports, escalating trade tensions. The move, which comes on top of existing metal duties, has raised concerns over a potential multi-front trade war.
As the European Union (EU) considers retaliatory measures, Trump has promised further announcements on broader reciprocal tariffs targeting countries that impose tariffs on U.S. goods. Speaking before attending the Super Bowl in New Orleans, Trump stated, “If they charge us, we charge them.”
Impact on Global Trade Partners
The largest sources of U.S. steel imports include Brazil, Canada, and Mexico, followed by South Korea and Vietnam. Canada, leveraging its hydropower resources, accounted for 79% of U.S. primary aluminum imports in 2024.
During his first term in 2017, Trump imposed tariffs of 25% on steel and 10% on aluminum but later granted exemptions to key trade partners, including Australia, Brazil, Canada, and Mexico. His successor, Joe Biden, negotiated duty-free quota deals with Britain, Japan, and the EU.
Trump’s latest tariffs are expected to trigger demands for exemptions. However, government and industry representatives argue that the move will primarily harm the U.S. economy by increasing costs for key industries, including defense, shipbuilding, and auto manufacturing.
Canadian Innovation Minister Francois-Philippe Champagne voiced his opposition, stating, “We will continue to stand up for Canada, our workers, and our industries.” Similarly, Australian Trade Minister Don Farrell emphasized that Australian steel and aluminum contribute to thousands of American jobs and are vital for shared defense interests.
South Korea’s Industry Ministry held discussions with domestic steelmakers to assess the potential impact, as shares in Hyundai Steel dipped by 2.9%.
Market Reaction and Retaliation Concerns
European steelmakers, which account for about 15% of U.S. steel imports, saw declines in shares, with ArcelorMittal and Voestalpine slipping between 1.3% and 2.5%. German firms Thyssenkrupp and Salzgitter remained relatively stable. The European Commission stated it sees “no justification” for the tariffs and pledged to “protect the interests of European businesses, workers, and consumers.”
Meanwhile, U.S. steel and aluminum producers surged in premarket trading. Nucor, U.S. Steel, and Cleveland-Cliffs rose between 6% and 10%, while Century Aluminum gained 8.5% and Alcoa 5%.
Trump also confirmed that while Japan’s Nippon Steel would be allowed to invest in U.S. Steel, it would not be permitted to acquire a majority stake. “Tariffs are going to make [U.S. Steel] very successful again,” he remarked.
Broader Trade Implications
Trump’s previous tariffs had pushed U.S. steel mill capacity usage above 80% in 2019. However, China’s global dominance in steel production has since driven down prices. A Missouri aluminum smelter, revived by past tariffs, was idled in 2023 by Magnitude 7 Metals.
Kevin Dempsey, head of the American Iron and Steel Institute, stated the organization would work with Trump “to implement a robust and reinvigorated trade agenda” aimed at countering foreign market distortions.
Trump has also signaled additional reciprocal tariffs, particularly on auto imports. He has long criticized the EU’s 10% tariff on cars while noting that the U.S. imposes a 2.5% tariff on passenger vehicles but a 25% tariff on pickup trucks—critical for U.S. automakers.
Retaliatory Tariffs and Industry Concerns
Chris Swonger, CEO of the Distilled Spirits Council of the United States, warned that Trump’s tariffs could provoke retaliatory duties from the EU, including a 50% tariff on American whiskey. “A 50% tariff on America’s native spirit will have a catastrophic outcome for the 3,000 small distilleries across the United States,” he cautioned.
Trump had previously threatened 25% tariffs on all imports from Canada and Mexico, citing concerns over border security and drug trafficking. Following some security concessions, he postponed these tariffs until March 1 but reiterated that further action is necessary. “Something has to happen, it’s not sustainable,” he told Fox News. “And I’m changing it.”
As global markets brace for further developments, the potential for escalating trade tensions continues to loom large.