Related News

World trade outlook defies Trump uncertainty, for now

The Trump effect: Credit insurers brace for growing demand

European Commission floats plan to finance overseas LNG

Trump announces pick for US Exim chair

US Exim takes on China with financing scheme for critical mineral imports

The Trump administration’s latest salvo of tariffs could pile further misery on Europe’s strained steel sector and harm a mutually beneficial North American aluminium market, industry groups warn. 

President Trump announced this week that from March 12, US companies will have to pay a 25% tariff on steel or aluminium imports from anywhere in the world. 

Signing a proclamation on February 10, Trump said the move is intended to encourage domestic production of both metals and reduce the country’s reliance on imports.

“Our nation requires steel and aluminium to be made in America, not in foreign lands,” he said. 

Andrew Shoyer, a partner at Sidley Austin law firm, says the decision reflects the administration’s “fundamental concern” over trade deficits, with the US importing greater volumes of both metals than it exports. 

“For the Trump administration, trade deficits are really the key cause of the inability of the United States economy to generate industrial jobs, that they are fundamentally harmful to the economy, and they must be eradicated,” he tells GTR. 

Although neighbouring Canada and Mexico were last week able to agree a pause on the introduction of blanket 25% tariffs, Shoyer says those negotiations were “more about leverage to secure a non-trade-related policy goal”.

In this case, tariffs are seen as a “critical tool” for the White House, Shoyer says. 

 

Backlash: European steel 

The announcement has provoked an immediate backlash from steel industry groups in the European Union and UK.  

Henrik Adam, president of the European Steel Association (Eurofer), issued a statement on February 11 saying the EU could lose up to 3.7 million tonnes of steel exports to the US as a direct result of the reforms.  

Although steel exports have already dropped by more than 1 million tonnes per year since the introduction of tariffs in 2018, Adam says the impact was cushioned by a tariff rate quota negotiated by the European Commission the same year.  

The US remains the second-largest export market for EU-based steel producers, he adds.  

A further issue is that a drop in US steel imports from outside the EU – which totalled around 23 million tonnes last year – could cause “significant” changes to existing trade flows.  

“These volumes are now likely to be massively diverted into the European market,” Adam says. “Already today global steel overcapacity is being offloaded massively on the vulnerable EU steel market at very cheap prices, mainly from Asia, North Africa and the Middle East.”  

Eurofer has previously warned that overcapacity in the steel market, driven largely by a dramatic rise in imports of cheap Chinese-origin steel, has placed a major strain on European firms’ competitiveness.  

If this move takes place, it may begin a spiral that the World Economic Forum described as a “worst-case scenario” in its 2025 Global Risks Report, with a domino effect of protectionist tariffs stemming from a European response to increased Chinese imports.  

Major steel producers warned last year the situation was “unsustainable”, calling for urgent action from authorities across the world.  

Adam says the EU’s steel industry closed 9 million tonnes of capacity last year and announced more than 18,000 job cuts.  

“The executive order by President Trump will inevitably further exacerbate the situation,” he says. “The need for decisive EU action to preserve the European steel industry becomes even more urgent.”  

Gareth Stace, director general of UK Steel, adds the US tariffs could represent a “devastating blow to our industry”, stifling exports and redirecting excess steel to the UK market.   

On the US side, Sidley Austin’s Shoyer says the move is also likely to cause “relative chaos in the market”, not least because importers of specialty products not produced domestically currently have no mechanism for requesting exclusions or exemptions. 

 

North America’s aluminium “fortress” 

Trump’s move has also drawn condemnation in Canada, which currently provides around 40% of the US’s aluminium imports. 

Canadian Prime Minister Justin Trudeau has promised a “firm and clear” response to the imposition of the tariffs, calling them “entirely unjustified” in an interview with the BBC on February 11. 

This message was echoed by the Aluminium Association of Canada, which called the tariffs “unfair and highly disruptive” in a press release. 

Association president and chief executive Jean Simard says tariffs “will only hurt US jobs, US industries” and drive prices higher. Canada’s aluminium sector generates more than US$228bn in US economic output, the association adds. 

The industry group argues that it is essential to “protect fortress North America” from the influence of China-origin aluminium, and that unfair Chinese trading practice have had “devastating impacts” on the continent’s industrial sectors. 

“This is why Canadian aluminium must remain exempt of any tariffs, because of its strategic role within North America’s integrated industrial value chain,” it says. “While the US produces, at best, one million metric tons a year of primary metal, it consumes six times that amount”. 

Brussels-based industry group European Aluminium says it believes a “joint effort” is needed between the EU and US to address the influence of China. 

“China is a non-market economy, and they are building capacity in all segments [of aluminium production],” says Djibril René, director of industry & market intelligence at the association. “These non-market capacities are one of the main issues for aluminium.” 

European Aluminium director general Paul Voss also casts doubt on Trump’s ambitions for self-sufficiency in the immediate term. 

“You can do anything with enough money, and if you’re prepared to produce irrespective of the production costs,” he tells GTR. 

“But even then, building up a smelter takes seven to 10 years. Even if they scrap permitting and everything, things take years. There aren’t pop-up aluminium smelters, even if somebody wants it to work like that.”  

However, Voss is optimistic the upheaval threatened by Trump could galvanise Europe into taking more drastic action. 

“There is a bit of a ‘team Europe’ vibe,” he says. “We feel heard and that’s good. Sometimes these moments force an acceleration of history.  

“There are dynamics that we’ve seen for some time now that we’re being forced to confront. I wouldn’t have wanted any of this, but we will try our best to turn this into a useful crisis.” 

Additional reporting by John Basquill