US steel market faces growing uncertainty amid tariff threats, says MEPS

The US steel market is grappling with growing uncertainty following President Trump’s latest announcement of potential new tariffs. These would go beyond the “reciprocal” rates first introduced on April 2 and are contributing to weakened domestic demand and heightened risks for global trade. This is the assessment of MEPS International, a UK-based steel market intelligence firm, in its latest analysis.

Several major trading partners—including Brazil, Canada, Mexico and the European Union—have been warned that their tariffs could rise further unless meaningful progress is made in ongoing negotiations by the new deadline of August 1. While the proposed “reciprocal” tariffs would not be added on top of the existing Section 232 measures, an increase in baseline rates could raise production costs for US steelmakers and aggravate uncertainty for steel buyers in an already cautious market.

According to MEPS US steel analyst Laura Hodges, there is little positive news for domestic buyers. She notes that high interest rates, restrained activity and shifting trade policies are combining to create a climate in which many customers are reluctant to make forward commitments. This general sense of unpredictability is, in her words, “killing steel demand.”

Originally, the government had set a deadline of July 9 to conclude a series of reciprocal trade agreements, after which higher tariffs—up to 50%—would come into effect. That deadline has now been extended by three weeks, but MEPS reports that concrete results have been limited. Formal notification of possible new baseline tariff levels has already been sent to over 20 countries. Brazil, a key supplier of raw materials, could face a 50% tariff. The EU’s rate may rise from 20% to 30%, while tariffs on Mexico and Canada are slated to increase to 30% and 35%, respectively—though only for goods not compliant with the United States-Mexico-Canada Agreement.

So far, only two preliminary deals have been announced, with the United Kingdom and Vietnam. Of these, only the agreement with the UK has been formally outlined, and even this remains uncertain. The UK was granted a 25% tariff rate, lower than the standard 50%, but that arrangement is conditional on policy actions the British government was required to implement by July 9. As no formal confirmation has been issued, there is a risk that tariffs on UK steel imports could revert to the higher Section 232 rate.

While the new tariffs do not apply directly to steel imports themselves, MEPS points out that they could still impact the sector by affecting raw materials such as scrap, pig iron and direct-reduced iron (DRI). These materials are exempt from Section 232 but remain subject to reciprocal tariffs—currently set at 10% for most suppliers. Brazil alone accounts for around 30% of US imports of these materials, and a tariff increase to 50% would drive up input costs, potentially weakening demand further down the supply chain.

Throughout 2025, the market has seen subdued buyer activity. MEPS reports that many steel purchasers remain on the sidelines, hesitant to commit amid shifting policy signals. This hesitation is reflected in price trends. After the June 4 announcement that Section 232 tariffs would double to 50%, the hot rolled coil contract price on the Chicago Mercantile Exchange rose sharply from $801 to $923 per short ton. However, prices have since declined by nearly $50, underlining a lack of sustained momentum.

With less than three weeks to go before the August 1 deadline, the limited number of concluded trade deals suggests that another extension is likely. That, in turn, would prolong uncertainty and continue to suppress demand. Meanwhile, the expectation that negotiations might eventually lead to a reduction in the elevated Section 232 tariff appears increasingly unlikely.

MEPS International continues to track market sentiment and pricing developments through its monthly International Steel Review. The firm warns that until greater clarity emerges on US trade policy, a meaningful rebound in steel demand is unlikely.

Source: MEPS, Photo: Fotolia