Aside from Trump tariffs, steel and aluminum have little in common
Aside from Trump tariffs, steel and aluminum have little in common
Steel and aluminum just seem to belong together, right?
We’ve been hearing that phrase — “steel and aluminum” — since 2018, during the first round of tariffs ordered by President Donald Trump. He proposed an updated version of the policy Monday. But the two metals, the industries that produce them and the markets they serve are quite different.
Let’s start with steel. The U.S. produces most of what it uses. After Trump imposed tariffs during his first administration, domestic production rose, said Jennifer McKeown at Capital Economics.
“The import share of steel in the U.S. has been falling since 2018. It’s now around 32%, so around a third,” said McKeown.
U.S. steelmakers will likely benefit from tariffs on foreign competitors. And, McKeown said, “there’s quite a lot of spare capacity in the U.S. steel sector, which means there is scope for production to pick up again.”
Rising steel prices will affect many industries, starting with construction. “There are a lot of worries among contractors,” said Brian Turmail at Associated General Contractors of America.
He said steel is built into what contractors charge for projects. In homebuilding, “you know, a multifamily unit, you might be costing out 50 sets of washer-dryers, 50 stoves, 50 dishwashers,” said Turmail.
Aluminum is a whole different metal. We produce only about half of what we use domestically. The vast majority of imports come from Canada. It’s used in electrical components, appliances and aircraft, said Richard Aboulafia at AeroDynamic Advisory.
“Boeing’s biggest product, the 737, the structure is 90% aluminum,” said Aboulafia.
Aluminum is not cheap to make, said Gary Hufbauer at the Peterson Institute for International Economics.
“It requires a lot of power, which turns bauxite into the metal. Well, there’s a shortage of electricity now in the U.S. with the [artificial intelligence] boom,” said Hufbauer.
So he said it’s unlikely that domestic aluminum makers will be able to increase their output and compete with foreign producers, even with a 25% tariff on imports.
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