North American steel trade tensions are on the rise as President Donald Trump signals the potential reimposition of tariffs on steel imports from Canada and Mexico, threatening to disrupt the established trade relationship between the three North American nations. Canadian and Mexican steelmakers are moving cautiously, with some halting new orders to the US as they anxiously await the administration's next steps.
Trump's administration previously exempted both Canada and Mexico from sweeping 25% steel tariffs imposed during his first term, but increasing industry concerns suggest these protections may soon vanish. Reports indicate Canadian steelmaker Stelco has begun pausing sales quotes to US customers. Similarly, Flack Global Metals, which supplies steel from Mexico-based mills, stated local suppliers refused new orders, fearing upcoming tariffs. Jeremy Flack, CEO of Flack Global Metals, described this apprehension within the industry, noting, "They’re off balance because of this. They’ve gone from concerned to unconcerned to concerned again."
This volatility adds layers of complexity to the trade dynamic, particularly as the US relied on foreign imports for roughly 27% of its total steel consumption, equaling about 91 million tons. Data from the US Commerce Department highlights Canada's position as the primary foreign supplier, with Mexico trailing closely behind. This dependency heightens the stakes for both Canadian and Mexican producers, particularly as they face shifting commercial policies and potential tariff reimpositions.
While Canadian and Mexican producers are grappling with the uncertainty, they are also making plans for growth and expansion. Major steel manufacturers like DeAcero and Gerdau have pipeline projects aimed at increasing production capabilities to seize the moment when demand begins to explode again. Gerdau, for example, plans to build a special bar quality steel plant with the expectation of serving clients relocating their manufacturing operations closer to home. “The company’s North American steel production is on track for recovery,” stated Gustavo Werneck, Gerdau's chief executive officer.
Meanwhile, DeAcero is investing approximately $1.3 billion to expand its operations with new mills aimed at meeting the vast steel demand projected for the next few years. This ambition runs parallel to the development of various other steel projects across Mexico, indicating confidence among producers. By 2025, the company is expected to have increased its production capacity significantly, aligning with domestic resurgence expected from economic stimulus.
The fluctuations within the global steel market, coupled with domestic decisions from the US administration, will influence the direction these companies take. Lourenco Goncalves, CEO of Cleveland-Cliffs Inc., which has ties to Canadian steelmaker Stelco, acknowledged the reality of the situation, stating, "President Trump will do what President Trump wants to do. He has a plan, and I will play accordingly." This sentiment embodies the difficult position many executives find themselves within the current trade climate, as they balance the potential ramifications of new tariffs against the promises of investment and recovery on the horizon.
Traders and industry analysts remain divided on the immediate impacts of these potential tariffs and how they could affect pricing and availability as US mills might prepare to restock after reduced inventory levels late last year. The rising tension is palpable, leading experts to caution about the upcoming adjustments, multiple steel projects, and how they will interact with bolstered national production capabilities. “The outlook for 2025 improves as U.S. mills look to restock after subdued efforts to increase inventories,” noted one industry assessment.
With significant investment moves from various steelmakers, the North American steel industry is poised at the edge of transformation and challenge. Increased tariffs could catalyze shifts within the supply chain, but some companies remain resolute, prepared to support the demands of domestic manufacturing shifts even amid uncertainty. Each development will be carefully weighed against both the immediate effects on tariffs and the longer-term ramifications for cross-border trade and steel supply within North America.