US Metal Tariffs: Evaluating Domestic Manufacturing Impact

President Donald Trump's 25% import tax on all steel and aluminium entering the US is now set to come into effect on March 12. 

In addition to these tariffs President Trump has introduced new standards for what qualifies as US steel and aluminium production. Steel must be "melted and poured" and aluminium must be "smelted and cast" within the country to qualify, a move designed to prevent nations like China and Russia from bypassing them by routing cheap products through other nations.

The tariffs have sparked concerns both domestically and internationally, considering the US manufacturing sector's strong reliance on imported aluminium from nations like Canada and Mexico. 

President Trump has argued the move is necessary to revitalise US manufacturing, stating: "Our nation requires steel and aluminium to be made in America, not in foreign lands." 

But with his recent pause on his controversial tariffs on Mexican and Canadian goods, there is industry scepticism about whether this import tax on metals will materialise. 

Claims that they form part of a broader negotiation strategy continue to grow, considering the tariffs were paused after Mexico and Canada reaffirmed they would place troops at their respective borders, making Trump appear successful in his goal to ensure Canada and Mexico prevent illegal immigration. 

The word reaffirmed is key here, as the agreement to place troops at the border is not something newly negotiated by Trump, but instead an agreement that had already been made with the Biden administration. 

Stephen Moore of the Heritage Foundation, who served as a senior economic advisor to Donald Trump during his 2016 presidential campaign and wrote 'Trumponomics', the de-facto book about the President's economic strategy, has argued that Trump's economic policies are truly about drawing global attention to the US's trade position.

"Just about everything Donald Trump does in Washington is a negotiating tactic," he says.

However if these tariffs are more than just a means to negotiate, they are set to impact manufacturers across the world. 

US manufacturing, which is strong on steel and weak on aluminium, will navigate mixed impacts. 

US impact

The announcement of steel and aluminium tariffs has been greeted by market optimism in the US, with the share prices of US steelmakers like Cleveland-Cliffs soaring by nearly 20%.

The US is the third largest producer of raw steel in the world, after China and India, ranked sixth globally in pig iron production. In 2024, the industry produced over 74 million net tons of steel, and economists are predicting further growth this year. 

Tariffs could protect US steel manufacturers from foreign competition, leading to job growth and increased production. This could lead to a reduced dependency on imports, strengthening the US's domestic industry. 

However this doesn't take into account the other key material the tariff targets: aluminium, a material critical to manufacturing in the automotive, aerospace, aviation and defence sectors.

Aluminium is used across packaging, construction, consumer white goods, heavy machinery and electrical transmission lines. Around half of all aluminium used in the US is imported, with the vast majority coming from Canada. 

In 2024, Canadian imports equalled 3.2 million tons, making them twice the amount of the next nine countries combined.

So, while US manufacturers will likely be able to source affordable domestic steel, they will struggle with the rising costs of imported aluminium. 

These rising costs will contribute to long-term industry shrinkage and job losses. 

With the necessity of aluminium to US public infrastructure, domestic goods and transport the nation will likely experience a slowing of building projects and development. 

“Since the announcement from President Trump threatening tariffs on global imports, the trade market can only be described as an unstable, ever-changing state," says Rob Shaw, GM EMEA at Fluent Commerce. 

“If the US does proceed with imposing tariffs, other countries will retaliate, as we’ve already seen with China. In this scenario, tariffs may be imposed in the opposite direction, raising costs within the supply chain.  

"Ultimately, it’s consumers who will bear the brunt of these changes. To protect their profit margins, businesses will inevitably pass on higher costs, placing additional financial strain on buyers already struggling with economic pressures. 

"The exception is the luxury goods market, where high-income consumers will be able to absorb the additional costs. " 

Reshaping the US' position in global trade

Ultimately, the success of these tariffs will depend on the US' ability to scale up its domestic production capacity of key metals without stifling innovation or creating inefficiencies.

The foundation to do this with steel is, arguably, already there, but it isn't with aluminium. 

If the nation is to create that foundation through these tariffs, it will come with prominent costs to domestic consumers and manufacturers and will continue to reshape the nation's position in global trade.

China and Canada currently dominate global aluminium manufacturing and, with the Trump administration's ongoing hostility to both nations – threatening tariffs, calling for Canada to become a 51st state and repeatedly accusing China of sending an Opioid epidemic to the US – retaliation in the form of tariffs is to be expected. 

This exposes a stark reality that globalisation has inescapably redefined the world's manufacturing landscape. No nation, including the US, can return to the industrial landscape of the 1960s.

Today, global manufacturing is defined by operations spanning continents and interconnected supply chains. 

Competitiveness hinges on more than what and how nations produce. They must support companies in keeping pace with technological evolution and have the strategic foresight to build a pool of skilled labour. 

Achieving this and revitalising the sector requires investment and growth in both domestic production and international trade relationships. 

Could the US build a stronger manufacturing base through tariffs on steel & aluminium imports? Possibly.

But going down this path will come with consequences, many of them to global competitiveness, as tariffs continue to alienate US allies and turn trade attention to China.

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