Trump implements 25% tariff on steel, aluminum imports

President Donald Trump implemented 25 percent tariffs on imports of steel and aluminum, a move that could bolster the financial fortunes of domestic producers of the materials while resulting in higher costs for many North American auto makers and suppliers.

The Feb. 10 move could have a swift impact on the auto industry. Auto makers and suppliers that rely on steel and aluminum imports from countries such as Canada and Mexico will see costs rise immediately, while prices on domestic supplies of the metals are also likely to rise as producers adjust to increased demand from customers, experts said.

"The supply chain requires a steady price and a steady supply of product to keep assembly lines going," said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions.

The tariffs are the latest to be signed into effect by Trump since he took office in January, following a 10 percent levy on all goods imported from China that went into effect Feb. 4. Trump also signed executive orders implementing 25 percent tariffs on virtually all imports from Canada and Mexico that were set to go into effect that day until last-minute deals were reached that delayed those until March.

Trump also is expected to announce reciprocal tariffs later in the week on countries that tax U.S. imports.

The steel and aluminum tariffs are more expansive than those Trump put into place during his first term, when 25 percent tariffs on steel and 10 percent duties on aluminum were applied to imports from Canada, Mexico and the European Union.

The tariffs on Canadian and Mexican steel and aluminum were in place for about a year before being dropped in 2019 as the countries looked to adopt the United States-Mexico-Canada Agreement. The EU tariffs lasted until 2021.

A 2023 report by the U.S. International Trade Commission found that the tariffs reduced imports of affected steel by 24 percent while increasing the price of steel products in the U.S. by 2.4 percent. Aluminum imports fell 31 percent, with prices rising 1.6 percent.

The report also found that the tariffs led to "decreased supplies of automotive steel products and increased input costs for automotive manufacturers," in addition to longer lead times.

The U.S. is the second-largest importer of steel worldwide, according to U.S. International Trade Administration data, having imported more than 25 million metric tons of steel in 2023. More than half came from three countries: Canada, which accounts for one-quarter of U.S. imports, Brazil and Mexico.

Meanwhile, about half of all U.S. aluminum was imported, the vast majority of which came from Canada.

Auto manufacturers in North America should brace for increased costs and reduced profitability on certain models, Fiorani said.

"When you look at an aluminum-intensive vehicle like the (Ford) F-150, keeping the price of aluminum at a reasonable level is important to the profitability of that vehicle and the volume of that vehicle," he said.

It was not immediately clear how the steel and aluminum tariffs would impact ongoing negotiations between the U.S., Canada and Mexico over the broader 25 percent tariffs Trump has threatened. If those tariffs are ultimately implemented in addition to those on steel and aluminum, it would be a "triple whammy" for auto manufacturers, said Patrick Anderson, CEO of Anderson Economic Group.

Citing an analysis his group conducted of more than a dozen models produced in North America, Anderson said vehicle costs could rise anywhere from $4,000 to $10,000 if tariffs on all Canadian and Mexican goods were implemented. That figure that would rise if steel and aluminum face levies on top of that, he said.

"It's a two-alarm fire for the industry before we even get to additional tariffs on steel and aluminum," he said.

U.S. steel and aluminum manufacturers figure to benefit from the new tariffs as their customers look to find domestic sources of the materials. Steel producers' stocks prices reflected that optimism, as Cleveland-Cliffs shares gained 18 percent on the day, U.S. Steel Corp. shares rose 4.8 percent, and Nucor Corp. stock improved 5.7 percent.

The steel tariffs also come amid a stalled deal by Japan's Nippon Steel Corp. to buy U.S. Steel for $14.1 billion. The transaction was blocked by former President Joe Biden and is also opposed by Trump.

Trump said Feb. 7 after a meeting with Japanese Prime Minister Shigeru Ishiba said that Nippon Steel is now considering investing in U.S. Steel instead of purchasing the company outright. Trump told reporters Feb. 9 that Nippon Steel cannot have a majority stake in the U.S. firm. The two companies are challenging the U.S. block on the deal in court.

Reuters and Bloomberg contributed to this report.