The U.S. metals market reeled after President Donald Trump’s surprise move to double tariffs on imported steel and aluminum, announcing the policy at U.S. Steel’s Irvin Works on Friday, sending shockwaves through global supply chains.
The new 50% tariffs, set to take effect Wednesday, are already reshaping the landscape for American manufacturers, who now face the prospect of the highest input costs in more than a decade.
On Monday, futures tied to the all-in price of aluminum delivered to the U.S. Midwest soared an eye-watering 54% on the Comex exchange, hitting levels not seen since 2013. Spot prices for aluminum in the Midwest climbed to a premium of 58 cents per pound — about $1,280 per ton — over the London Metal Exchange (LME) benchmark. U.S. buyers are now paying roughly 50% more than their international rivals for this critical metal, used in everything from beer cans to rooftop ventilation.
Steel markets also felt the heat. Comex steel futures jumped more than 8% in early trading, despite the relatively thin liquidity in those contracts. The price moves reflect broad anxiety: the U.S. imports over 80% of its aluminum and nearly 20% of its steel, according to Morgan Stanley data, leaving domestic buyers highly exposed to global price swings and supply shocks.
Economists are closely watching the latest escalation, which doubles the tariff rate on steel and aluminum from the 25% rate first imposed in March 2018 under Section 232 of the Trade Expansion Act of 1962, citing national security. Dr. Sunderesh S. Heragu, Regents Professor at Oklahoma State University and president of the Institute of Industrial and Systems Engineers, said the administration’s move was “the path of least resistance” following a recent decision by the U.S. Court of International Trade that ruled many of Trump’s other tariffs illegal. That ruling, however, was temporarily stayed on May 29, 2025, by the United States Court of Appeals for the Federal Circuit, allowing the tariffs to remain in place during the appeals process.
“Steel and aluminum tariffs fall under a different statutory authority, so they’re insulated from the court’s decision and can be escalated quickly,” Heragu explained. While the legal battle over other trade measures continues, the Section 232 tariffs remain a lever the administration can pull without immediate judicial interference.
Stan Kolbe, executive director of government and political affairs at the Sheet Metal and Air Conditioning Contractors’ National Association (SMACNA), described the situation as dire: “With this second spike, the higher tariffs are even more painful to contractor bottom lines.”
Even firms that prioritize domestic sourcing are being squeezed when U.S. mills cannot meet demand.
“We buy American steel and aluminum first, while most do not, apparently, but our members are being hit hard when domestic supply is insufficient, or domestic production cannot meet time and supply demand,” Kolbe said.
DOUBLE UP: A doubling of tariffs on steel and aluminum announced on Friday caused prices to surge on Monday. (Staff photo)
The construction sector — one of the nation’s largest employers — has been among the hardest hit by tariff-induced cost spirals.
“Companies in the U.S. are paying the highest prices for steel and aluminum, and probably copper very soon, in the world,” Kolbe noted, adding that these costs “must be passed on if possible.”
Kolbe argued that Washington could have pursued alternative policies: “Perhaps if the Federal government had enforced a far more robust ‘Buy America’ policy, one that we would support, domestic metals production would have been encouraged to expand, responding to a more market-based economic strategy before mandating commodity taxes, as tariffs are widely considered.”
He pointed to the Biden administration’s CHIPS Act as an example of how targeted tax incentives can spur investment without imposing a direct financial burden on contractors and consumers.
Economists: Ripple Effects, Uncertainty, and Innovation Risks
Heragu underscored the economic complexity. He noted that the uncertainty created by tariff “whiplash” is prompting companies to delay or cancel capital expenditures.
“CapEx is slowing down across the board,” he said, as executives opt to “just wait for more data to show that inflation is indeed going to be trending in the downward direction.” He pointed out that even before Trump’s latest announcement, aluminum prices were already increasing in the early part of the year, and warned that continued volatility could prompt a further contraction in manufacturing investment.
The Nippon Steel–U.S. Steel deal, a high-profile transpacific merger that has fueled debate in both Washington and Tokyo, has been pre-approved by the Trump Administration as it clears the national security review and the Nippon Board. The President, who has yet to see the final language, emphasized that the deal is expected to involve “no layoffs” for steelworkers and would include a $5,000 bonus for them. Trump also highlighted Nippon Steel’s planned $14 billion investment, calling it “unprecedented in the history of Pennsylvania” at the Irvin Works rally on Friday. The deal however is still not finalized.
Heragu remarked, “It looks like the Japanese are getting a bad deal when it comes to the Nippon situation.” He predicted that, given shifting U.S. policies and persistent uncertainty, “they will have only done a fraction of that investment” in the year ahead.
ROLLED STEEL: As legal disputes over other trade measures play out, the administration still has the ability to use Section 232 tariffs without facing immediate challenges from the courts. (Staff photo)
Steelworkers: Legal, Security, and Community Concerns
The United Steelworkers (USW), representing 850,000 workers nationwide, voiced deep skepticism about both the tariff policy and the pending merger between U.S. Steel and Nippon Steel. In a statement, the union said, “We have not participated in the discussions involving U.S. Steel, Nippon Steel, and the Trump administration, nor were we consulted, so we cannot speculate about the meaning of the ‘planned partnership’ between USS and Nippon, or the ‘golden share’ that some politicians have claimed will be issued to the federal government.”
Citing national security risks and job losses, the USW warned, “Whatever the deal structure, our primary concern remains with the impact that this merger of U.S. Steel into a foreign competitor will have on national security, our members and the communities where we live and work.” The union pointed to Nippon’s “long history of committing unfair trade practices,” with the International Trade Commission finding violations in 13 separate cases and the Commerce Department recently imposing duties of over 200 percent for illegal dumping.
“There is a vast difference between public relations and putting commitments in writing,” the USW stated. “Any final deal that may emerge from discussions between the merger parties and the federal government must be viewed through that lens, and not the lens of wishful thinking that has been adopted by far too many politicians and others.”
International Fallout: EU, Canada, and the Global Trade Chessboard
The European Union condemned the tariff hikes, warning that they “add further uncertainty to the global economy” and promising swift countermeasures if the U.S. does not return to the negotiating table. Canada, which shipped 6.6 million tons of steel to the U.S. last year, and other major American allies are also alarmed. The Organization for Economic Cooperation and Development estimated that the global steel glut topped 551 million metric tons in 2023 — more than four times the output of the entire European Union, keeping prices low and U.S. mills on the defensive.
The global steel glut isn’t just a matter of cheap imports weighing on U.S. prices — it’s colliding head-on with domestic instability. At the annual meeting of the Spiral Duct Manufacturers Association (SPIDA) in May, industry leaders described an environment where idled steel plants, evaporating exemptions, and confusing tariff policies leave both union and non-union players deeply unsettled. John Cologgi of Olympic Steel noted that “inventory levels are trending lower as we head into 2025,” while galvanized steel imports have “fallen off a cliff” since tariffs increased last year. Domestic uncertainty has only deepened, as Cleveland-Cliffs, a major U.S. producer, announced plans in early May to fully or partially idle six facilities and cancel a new transformer plant in West Virginia. CEO Lourenco Goncalves cited “the lagging effect of lower index prices in late 2024 and early 2025.”
Industry experts are also bracing for the possibility of new tariffs on copper, a move that could further escalate costs for contractors and equipment manufacturers. Market watchers are already noting a spike in price speculation.
Kolbe, at SMACNA, warned that “the new tariff burdens … outweigh the extension of the 2017 Tax Act,” and called for the White House to “more seriously consider the plight of the U.S. companies that buy aluminum and steel and what this spike in tariff-driven prices and further market uncertainty means to an already anxious construction market.”
Heragu added a note of caution about the long-term implications for American innovation: “If we end up focusing more on product manufacturing domestically rather than product design (a high value activity), then you’re not investing in innovation, and so you’re behind. The advantage that we had in design and innovation — we may give that away, too.”
As the U.S. metals sector navigates a period of extraordinary volatility, contractors, workers, and policymakers alike grapple with the consequences of a fast-moving trade war. The stakes could not be higher: in the words of the USW, “Trust nothing until you see it in writing.”