US voters have officially re-elected Donald Trump to be the 47th President of the United States. And, similar to his first term, Trump is expected to focus on tariffs and tax cuts as a means to make America more competitive on the world stage, as he transitions back into office following a period of extreme steel price volatility combined with recent high inflation following the COVID-19 pandemic.
For the still struggling US steel industry, he has proposed much higher import tariffs as continued claims of anti-competitive pricing and foreign dumping of steel continue to dominate conversation in US steel markets. According to reports, new tariffs on Chinese imports could rise to as much as 60-100 percent, while other countries could see so-called “blanket tariffs” rise to 10-20 percent. Trump’s 2018-2019 tariff policy affected imported Chinese items such as steel, aluminum, semiconductors and electric cars, and those tariffs largely remain in place or have increased during the Biden administration.
While Trump claims continued tariffs on imported steel have netted billions of dollars for the US treasury, some market watchers, economists and steel analysts caution that new tariffs of 10-20 percent on all US imports could have unforeseen and devastating consequences.
Some say increasing tariffs could put unwanted upward pressure on inflation at a time when it now seems to be under control, though according to media reports, proposed higher tariffs would likely not be implemented for many months due to administrative procedures and negotiations, in a similar manner to those implemented during his first term.
SteelOrbis contacts recently offered their thoughts on a second Trump presidency, and how his election mandate will affect the US steel industry profitability and pricing going forward.
“US steel markets already have been protected from China,” one steel market analyst told Steel Orbis in an exclusive interview on November 12. “China already is facing between 200-530 percent antidumping and countervailing duties on its steel, so not much steel is coming into the US right now. What’s more important,” he said, “is the fact that if Trump does what he says he’s going to do, new tariffs that could potentially affect Mexico and Canada could have more effect on US fabricators that make things from steel than on steel itself. We could potentially see warfare within in the US steel industry from those who dislike the way that Mexico and Canada are being treated.”
The analysts noted that if Trump’s goal is to get more steel fabrication based in the US, a key issue should be how soon US companies could ramp up their capacity to meet demand, especially given current high US employment levels.
“We are now near full employment,” the analyst added. “There just is not a huge pool of US workers available to make auto parts.”
“Nothing is going to happen until after the election, and depending on who wins will probably determine what (2025) will look like,” said one US domestic scrap trader to SteelOrbis in the days preceding the election. “If things are this bad now under Harris and Biden, and she gets elected, then next year scares me.” He continued, “Truly, it feels like we are in a ticking time bomb right now. It is either going to go off after the election or be diffused. Can Trump even diffuse the issues we have fast enough? I do feel that we have the best chance with (Trump) saying that as neutrally as possible.”
Another contact was more pessimistic at least through the end of 2024, regarding a potential Trump win’s effect on steel markets.
“We are waiting for the election to pass, but nothing will change much,” another flat steel market insider told SteelOrbis. “Because of continued low demand, people expect flat pricing to continue until the end of the year.”
Following the successful Trump win, spot markets for steel were little changed overall, though some market insiders told SteelOrbis a rally for prices could occur over the next month. In other financial markets, pricing in the stock market boomed following the election, with a one-day gain of 3.6 percent noted, while bond yields also soared, indicating to some the likelihood of increased inflation.
“We’re expecting a one hundred dollar per ton increase in flat steel pricing over the next month,” said one pipe trader that monitors competitive pricing in US flat steel markets. “The increased likelihood of tariff restrictions is expected to further curtail steel imports, and allow US steel producers to seek higher pricing.”
According to the International Trade Administration (ITA), in 2023, the US imported 25.6 million tons of steel, a decrease of 8.7 percent from 2022. The ITA said the main reasons for the reduced imports are higher import tariffs, increased domestic production, lower steel demand, and geopolitical factors.
Steel futures prices on the Chicago Mercantile Exchange, a solid indicator of future demand for US finished steel supply, saw the US hot rolled coils continuous contract, which rallied in the weeks leading up to a Trump win on November 5, rise to $740/nt on November 7, though pricing since has declined to $701/nt as late as November 13. Over the past year, the continuous contract has ranged from a high of $1,155/nt in late-December 2023, to a low of $652/nt in mid-August. Pricing since the recent low has been extremely volatile, though has generally been on an upward trend since.
Market insiders told SteelOrbis that recent higher pricing offers from US steel mills for hot rolled coils is a reflection of improved market optimism ahead of an expected Trump win.
“Increased mill pricing from Nucor (to $740/nt) and $750/nt for Cleveland Cliffs is a reflection of an anticipated Trump win,” one Midwest flat steel insider told SteelOrbis. “The Trump victory also caused steel stocks to move up 15 percent this week.”
Some key US steel organizations expect a Trump win will bolster much-needed investment in the industry.
“Steel has been front and center during the presidential campaign and we are confident the concerns of our industry and its workers will receive priority attention by the incoming Trump administration,” said Kevin Dempsey, president and CEO of the American Iron and Steel Institute in a prepared statement following the 2024 presidential election win. “This includes focusing on the need to strengthen trade enforcement, preservation of the Section 232 steel tariffs that President Trump instituted in his first term, using American steel to fix our crumbling infrastructure, championing tax reform that promotes investment in American industry and ensuring that government regulations do not adversely impact industrial competitiveness. We are looking forward to working closely with the president-elect and his team to see these goals become a reality.”
“On the congressional side, we were pleased to see that the results that have been released to date indicate that the majority of the members of the Congressional Steel Caucus in the US. House of Representatives, and the Steel Caucus leadership, will be returning in 2025. While we were disappointed that long-time leading steel supporter Sen. Sherrod Brown (D-OH) lost his election, steel remains a critical issue in Ohio —and we will be working to engage incoming members of Congress from steel states to ensure they are informed about our industry’s key issues. We will also be working with member companies to attract new members for the Congressional Steel Caucus to ensure steel industry policy priorities are advanced.”
Recent industry reports caution that if there is retaliation against the US by foreign governments in response to higher tariffs, it could lead to a multi-lateral trade war which could be very negative for the world economy and for commodity demand overall. Recently, China delayed the announcement of its fiscal policy until after the election, and industry insiders say China could provide increased spending to stimulate demand and offset any effects of the US tariffs. The move is expected to boost iron ore prices in the short term, the reports indicate.
“Continuing (or making permanent) the tax cuts could be helpful to the US economy,” another steel market insider told SteelOrbis following the Trump win. “But steel traders and importers are facing another four years of chaos,” he added. “People could get really hurt in the process (of negotiating tariffs), or find opportunities, like loopholes, that they have not seen in a long time.”
Some also argue that tax cuts could potentially push up interest rates, and together with higher tariffs, could potentially cause the US dollar to rise, negatively affecting commodity prices.
The continuous futures price of copper, a key component in advanced EV batteries, traded at $4.0810/lb. on November 13, off from a one-month high of $4.4750/lb. on November 5. As a key component of its economic policy, the Trump administration is expected to focus more on developing fossil fuel supply and infrastructure and less on thus far, unpopular EV mandates proposed under the Biden-Harris administration.