The Return of Section 232: Steel ProtectionismReborn
President Trump wasted no time implementing his campaignpromises on trade protection, reinstating 25% tariffs on steel and aluminumimports from all countries on February 10, which took effect March 12, 2025.The administration cited national security concerns under Section 232 of theTrade Expansion Act as justification, a move that immediately sent shockwavesthrough global markets.
Industry groups like the Steel Manufacturers Associationand the American Iron and Steel Institute quickly praised the decision. PhilipBell, president of the Steel Manufacturers Association, called it"President Trump's signature achievement in the first 100 days,"noting that the revised Section 232 tariff would "close the loopholes thathave weakened it over the years" and "help to level the playing fieldfor American steel workers."
Market Turbulence and Price Volatility
The steel market's reaction was immediate and dramatic.Fastmarkets' calculation of the steel hot-rolled coil index for the US Midwestjumped to an average of $936 per short ton in March, representing a 16%increase from February and a staggering 32.5% rise from January levels. Thisprice surge occurred as buyers rushed to secure inventory ahead of the tariffimplementation.
"Most people are being very careful on what they buy,with the high prices and uncertainty with tariffs," reported onedistributor in mid-March, while another noted, "Customers are panic-buyingand speculating on higher prices due to the announcement of tariffs." Thismarket behavior has created what analysts are calling "tariffturbulence" that best summarizes the first 100 days of President Trump'ssecond term.
Global Repercussions and Trade Tensions
Between January and April 2025, the average effective UStariff rate skyrocketed from 2.5% to an estimated 27%, the highest level inover a century. This dramatic shift has strained international relations anddisrupted global supply chains.
Financial markets experienced significant disruption inearly April as investors grappled with the implications of Trump's sweepingtariffs. The uncertainty has affected not just the steel industry but rippledthrough adjacent sectors, particularly automotive manufacturing and energyinfrastructure.
Industry Divided: Protection vs. Uncertainty
While many domestic steel producers have welcomed theprotective measures, not all industry stakeholders share their enthusiasm. YongKwon, senior campaign adviser at the Sierra Club, argued that "The Trumpadministration's continuing refusal to provide clarity around tariffs hascontributed to automotive companies reducing their purchases of steel fromdomestic steelmakers."
Hilary Lewis, steel director at Industrious Labs, offered anuanced perspective: "In theory, tariffs to protect the domestic steelindustry can be helpful in protecting jobs and modernizing facilities. However,even with a measured approach to tariffs, we need to pair those policies withdirect investment in our antiquated coal-based steel mills."
The Automotive Connection
In a significant development, Trump spoke at a rally inMichigan on April 29 to mark his first 100 days in office, where he defendedhis use of tariffs and announced plans to offer partial tariff rebates tocompanies that assemble cars in the US. This move appears designed to addressconcerns from the automotive industry, which has been caught in the crossfireof rising steel prices.
The back-and-forth on tariff policies has created whatLewis described as "chaos around both steel industry and automotiveindustry tariffs," which is "destroying demand and creating anuncertain business environment where it is difficult to see a clear pathforward."
Energy Sector Complications
The energy sector has not escaped the tariff turmoil.Trump's "energy dominance" agenda, a cornerstone of his campaign, hasbeen complicated by the very trade policies his administration has implemented.According to Reuters, "Tariffs on steel and aluminum will increase projectcosts" for energy infrastructure development, creating a policycontradiction that industry leaders are struggling to reconcile.
Looking Ahead: The Next 900 Days
As the administration moves beyond its first 100 days,questions remain about the long-term strategy for steel tariffs. Kevin Dempsey,president and CEO of the American Iron and Steel Institute, indicated that"the administration recognizes that foreign steel overproduction has ledto increased dumping of excess foreign production onto world markets, as wellas widespread transshipment and diversion of steel from third countries."
This suggests that the administration may be preparingadditional measures to address what it perceives as unfair trade practices.However, the unpredictability of Trump's approach to tariffs, characterized bythe New York Times as "on-again, off-again", leaves both domestic andinternational stakeholders uncertain about what lies ahead.
Key Takeaways:
• Steel prices surged 32.5% in the first quarter of 2025following Trump's implementation of 25% tariffs on steel imports, creatingmarket volatility and panic buying.
• The average US tariff rate reached 27% by April 2025, thehighest level in over a century, straining global trade relationships anddisrupting supply chains.
• Industry remains divided, with domestic producerswelcoming protection while downstream users and analysts warn of rising costs,reduced demand, and an uncertain business environment hampering long-termplanning.
