MEPS: August 1 trade deadline unlikely to end US steel tariff uncertainty

An analysis by MEPS International suggests that the upcoming August 1 deadline for international trade negotiations is unlikely to resolve ongoing uncertainty surrounding US steel tariffs or alleviate the challenges currently facing stainless steel importers.

Despite recent developments—including a framework agreement with the United Kingdom and announcements of new trade deals with the EU, Vietnam, Indonesia, the Philippines, and Japan—most US stainless buyers remain skeptical that these efforts will lead to meaningful tariff reductions on steel imports.

The provisional 25% Section 232 tariff applied to UK steel imports in May—down from the 50% initially announced in June—has yet to be confirmed as permanent. Meanwhile, trade agreements with other countries largely exclude steel and aluminium and focus instead on reciprocal tariffs ranging from 15% to 20% on broader categories of imported goods. For instance, Japan’s agreement leaves the 50% tariff on steel intact, as does the EU's arrangement, which still references a potential quota-based deal but offers no clear pathway for tariff relief.

Minimal Immediate Impact Expected

According to MEPS, stainless steel stockholders in the US anticipate that the increased trade barriers introduced under President Trump will have long-term implications. The research indicates that recent domestic price increases by US mills—largely based on expectations of tariff-supported price floors—have only been partially accepted by the market. Many buyers and end-users have adopted a cautious stance, delaying purchases in the face of economic uncertainty and weak demand.

Despite the prevailing tariffs, some US importers are continuing negotiations with overseas suppliers in search of viable import opportunities. The introduction of the EU’s emissions-based CBAM taxes in January has reinforced interest from Asian producers in the US market, where domestic prices remain elevated.

Maintaining Import Channels

MEPS notes that US stainless steel buyers remain motivated to maintain supply chains from third countries, where competitive pricing allows. According to the US International Trade Administration’s SIMA data, stainless steel imports into the US reached 1.01 million tonnes in 2024—an 8.4% increase compared to 2023. At the same time, domestic production rose by 6.9% to 1.95 million tonnes, while global output reached 62.6 million tonnes, a 7% increase overall. In the first quarter of 2025, US stainless melt shop production was up 8.6% year-on-year, totaling approximately 553,000 tonnes.

Uncertain Outlook for Recovery

A wave of finalized trade deals after August 1 could, in theory, bring some clarity and restore market confidence. Should this happen, and if demand rebounds, US end-users may again rely on imports to meet supply needs. However, MEPS warns that broader economic indicators remain mixed.

The US Federal Reserve recently downgraded its GDP growth forecast for 2025 from 1.7% to 1.4%, and for 2026 from 1.8% to 1.6%. Data from the US Census Bureau also reflects economic strain, with construction spending down 2.1% year-on-year in the first five months of 2025, despite a modest uptick in new orders for manufactured goods.

As MEPS highlights, the inflationary effects of tariffs—combined with subdued economic indicators and continued interest rate pressure—may hinder any near-term recovery in stainless steel demand or pricing in the United States.

Source: MEPS, Photo: Fotolia