US Steel Prices Surge on Looming Tariff Threat, Exceeding Imported Costs

US steel prices have surged to levels exceeding imported steel, fueled by anticipation of President Donald Trump's threatened 25% tariff on foreign steel, Bloomberg reports. This move is already impacting US buyers, who are facing higher costs for domestic metal even before the tariffs are officially implemented.

The benchmark price for domestic steel climbed to over $900 a ton this week, marking a nearly 25% increase for the year. This surge has pushed US prices above those of imported steel, according to market sources who requested anonymity to discuss confidential information.

"What we’re seeing so far happen is mills capitalize on the tariffs and uncertainty of tariffs, and they’ve been able to raise prices such that at $900 a ton it’s more than what would happen to price with an actual 25% tariff implemented," said Timna Tanners, an analyst at Wolfe Research, to Bloomberg. "This isn’t the desired outcome Trump has articulated.”

Meanwhile, steel shipments are pouring into the US from various countries, including Egypt, Algeria, Malaysia, Brazil, and Vietnam, as buyers seek to avoid the potential impact of the tariffs. However, US steel demand remains sluggish due to high borrowing costs, making it expensive for businesses to undertake projects in sectors like construction and appliance manufacturing.

Trump's earlier this month ordered the 25% tariff on steel and aluminum imports, rescinding existing country-level exemptions. This protectionist stance has emboldened domestic steelmakers such as Nucor Corp., Cleveland-Cliffs Inc., United States Steel Corp., and Steel Dynamics Inc., to raise their prices.

Just five weeks ago, a ton of steel was selling for less than $700. This week, domestic producers are quoting prices as high as $1,000, levels not seen since the beginning of 2024. This highlights how tariff threats have inflated prices even amidst unchanged demand.

The predicament has left some Canadian and Mexican steelmakers refusing new orders. Algoma Steel Group Inc., for example, is facing "extreme pressure" on its order books, according to CEO Michael Garcia.

Canadian steel producers are facing a difficult situation, with limited options to divert shipments elsewhere due to a global oversupply of steel. The industry is more likely to pass on higher costs to US customers rather than redirecting materials, according to Catherine Cobden, president of the Canadian Steel Producers Association.

"In a context of over-capacity, where there’s too much steel being dumped in everybody’s market, it’s very difficult to shift markets," Cobden stated in an interview.