The global steel industry faces overcapacity, trade barriers and regional demand fluctuations. Recent tariffs and trade policies are upending and reshaping steel industry dynamics. According to the OECD, the overcapacity of steel production stands at 553 million tonnes and this imbalance will keep pressure on prices for most of 2025. As per the World Steel Association, it is projected to increase 1.2% in 2025 after years of decline. However, the growth is unevenly distributed across regions, with emerging economies more resilient than advanced economies.

The Trump administration has imposed a 25% tariff on all steel and aluminium imports into the USA. Unlike the previously imposed tariffs, this time, the tariffs apply to all national imports universally and to derivatives of steel and aluminium for all countries and importers without any exemptions. The new tariffs will have far-reaching implications on manufacturing costs and supply chains.

It will affect the US metals manufacturing industry, which is import-dependent on steel by 24% and aluminium by 35%. Various industries and consumer sectors will be significantly affected. Some analysts predict that the tariffs will reshape the US steel industry. There will be an increase in prices in six months, additional revenue will be generated and new projects will begin. However, the historical experience narrative is different. As of 2018, the tariffs introduced increased capacity utilisation by 83%, but the import surges eroded gains by 2024. The cyclic patterns indicate that tariffs will bring short-term benefits and not lasting industrial revival.

China is the world's largest steel producer, but it has scaled down production in early 2025. Despite production cuts, China exported over 110 million tonnes in 2024 and continued into early 2025. However, the export value fell by 3.9%, indicating weaker global market pricing power. Steel consumption in Europe is downturned due to war-related disruptions, unprecedented rises in energy prices and production costs and recession in construction and automobile industries. The overall demand for steel remains volatile.

China’s real estate crisis has increased exports; thus, there is now a large surplus in the global market amid weakening demand. As an unpredictable, unexpected and unfavorable surge could cause permanent damage to the domestic industry, India, the second-largest producer of Steel, is proposing a 12% tariff on a wide range of imported steel products for 200 days. All trading partners are willing to negotiate to resolve the trade tensions while preparing robust countermeasures as necessary defensive measures to protect their economic interests. The UK government is pragmatic in negotiating a broader economic agreement with the US to eliminate additional tariffs. The UK has not imposed retaliatory measures yet but has kept all options open.

In conclusion, the Trump Trade War 2.0 indelibly impacts the global steel landscape. Now, governments and businesses are preparing for the short-term and long-term implications. Steel companies worldwide are adopting strategies for capacity rationalisation, cost efficiency and pivoting towards higher-growth markets. The ramifications of the Trump administration tariffs are that the global steel industry is in flux, characterised by persistent overcapacity, intensifying trade barriers, potential retaliatory measures and divergent regional demand patterns.


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