What is the New February 2025 Tariff on Steel and Aluminum?
On Tuesday, February 10, 2025, President Trump announced a 25% tariff on steel and aluminum. This tariff applies to all trade partners of the United States without exceptions or exemptions.
How Will This Tariff Impact Domestic Steel Production?
Production of steel in the United States faces significant legacy costs due to infrastructure and union influences. Traditional steel mills often use Basic Oxygen Furnaces (BOFs). Newer steel production facilities use Electric Arc Furnaces (EAFs), which are generally more energy-efficient and less unionized. To compete on a global scale, the U.S. will need to leverage both BOF and EAF technologies.
The current tariffs are an extension of the 232 policy established in 2018, but with broader implications involving all trade partners, including Canada and Mexico.
How Will the Steel Market React to the New Tariff?
- Price Increases: Immediate price increase announcements have been observed in both steel and aluminum markets. The extent of these increases is currently unknown.
- Domestic Production Shift: Unlike in 2018, domestic flat-rolled production capabilities have increased, reducing the reliance on imports and supporting the domestic steel industry.
- Cost Increases: Consumers will face higher costs due to tariffs on imports and anticipated price hikes on domestically manufactured products. The extent of price increases will depend on domestic demand dynamics.
How Will the New Tariff Affect Pricing in the Metals Industry?
The full extent of price increases in the steel and aluminum markets remains unknown, and further analysis and monitoring are required to understand the impact on both domestic and imported products.
Here’s how we expect pricing to be affected:
- Expected Increases: Architectural products are expected to see a 5-10% price increase in the next 30-60 days. This includes painting, coating charges, and mill increases.
- Supply Chain Preparedness: Sheffield Metals, primarily sourcing from domestic mills, anticipates price adjustments based on domestic mill actions.
- Paint and Coating: Anticipated increases of approximately 5 to 7 cents per square foot.
- Steel Mills: Expected increases of 2 to 4 cents per square foot from January to February 2025, with potential for further escalation.
How Will Sheffield Metals Handle the Impact of the Tariff?
In the coming weeks, Sheffield Metals will be monitoring domestic mill price announcements and adjusting purchasing strategies accordingly. We will be evaluating supply chain strategies to mitigate potential disruptions and capitalize on increased demand.
We will communicate the anticipated price changes to customers and stakeholders and provide a minimum of 30 days’ notice for increases.
Now more than ever, it’s important to stay close to your metal supplier and keep them in the loop. Communicate with your supplier on current and future projects that you are bidding on or will be working on in the future.
