Steel Industry and Export: Challenges of the New Trade War

The implementation of a 25% customs duty on steel imports to the United States has added complexity to this strategic market for skyscrapers and the automotive industry, which has become unstable due to the uncompetitive nature of old metal smelting furnaces compared to steel recycling plants.

Protecting the American Industry

During his first term (2017-2021), President Donald Trump imposed a 25% customs duty on steel imports to the country and a 10% duty on aluminum imports in an attempt to protect the American industry and his voters, many of whom belong to the industrial Rust Belt region in the Midwest.

The last 12 operational smelting furnaces in the United States belong to US Steel, headquartered in Pittsburgh, Pennsylvania, and Cleveland Cliffs in Ohio. However, the impact of imposing customs duties has been very limited, according to Robin Nizard, an economic expert at the insurance company Crédit Covas.

As a result, U.S. steel imports decreased by 24% during this period, while aluminum imports decreased by 31%, according to a report from the U.S. International Trade Commission. However, Robin stated that “no clear benefit has been seen in terms of employment or production, and prices have risen,” leading to increased inflation.

Marcel Genie from the steel consulting firm ‘Laplace Conseil’ said, ‘The price of European flat steel is currently 600 per ton, while the price of American steel is 900 per ton.

Who Exports Steel to the United States?

The world produced 1.84 billion tons of raw steel last year (-0.9% compared to 2023). More than half of the production, or 1 billion tons, came from China, the world’s leading steel producer, according to the latest report from the “World Steel Association,” which includes 71 countries representing 98% of global production.

The United States is the fourth-largest producer in the world with 79.5 million tons (-2.4%). It is the second-largest importer in the world after the European Union, importing 26.4 million tons in 2023, while the bloc imported 39.2 million tons.

The United States primarily imports steel from Canada, which exported 5.95 million tons to the country in 2024, according to the U.S. Department of Commerce. Brazil comes in second place, with Washington importing 4.08 million tons of steel from it, followed by the European Union with 3.89 million tons.

The United States imports 3.19 million tons from Mexico, 2.5 million tons from South Korea, followed by Vietnam, Japan, and Taiwan with a total of about 1 million tons, and China with approximately 470,000 tons.

Why Does Trump Talk About Unfair Competition?

Steel prices experienced a sharp global decline last year due to excess global production capacity. According to the Organization for Economic Co-operation and Development, global steel surplus ranges between 500 and 560 million tons. China or Chinese steel companies based in Southeast Asia produce the largest volume of this surplus, flooding the markets, which European and American industrialists complain about and accuse the Chinese government of providing extensive support to these companies.

Experts have stated that the steel industry, which has been going through regular cycles of ups and downs over the past five decades, is currently facing a “structural” problem of overproduction.

However, some experts, including Marcel Genie, disagree with this analysis. He believes that the problems related to steel primarily stem from the uncompetitive nature of old smelting furnaces that produce what is known as “primary” steel through iron ore and coal, compared to steel made from recycled metal scrap in electric furnaces, as its production is much cheaper.

He stated that “companies relying on traditional smelting furnaces do not have the means to finance their transition in the energy sector, i.e., abandoning coal (and using gas or hydrogen) without receiving massive assistance from their countries.”

Marcel Genie pointed out that steel industries in Europe and North America have been experiencing a decline in steel exports over the past fifty years, while emerging countries have gradually developed their sectors, especially in the Middle East and North Africa.

The Japanese company “Nippon Steel” attempted to acquire the struggling “US Steel” company, but former U.S. President Joe Biden blocked this move, followed by Trump.

In Europe, where there are still about fifty traditional smelting furnaces according to Marcel Genie, the German company “ThyssenKrupp” announced the elimination of thousands of jobs. Two smelting furnaces in Duisburg, owned by the company “HKM,” are at risk of closure.

As for the furnaces in the city of Taranto in Italy, where the largest steel plant in Europe is located, they currently produce only 2 million tons annually, despite their production capacity of 12 million tons. In Europe, most smelting furnaces operate at less than 70% of their capacity, and they have announced the suspension of their major investment projects in carbon removal.

Countless Uses

Steel is one of the most important materials in modern industry due to its unique properties such as strength, durability, formability, and corrosion resistance when properly treated. Here are some of its importance in various industries:

Construction and Building: It is used in the metal structures of buildings, bridges, and stadiums due to its high strength and relatively light weight compared to concrete. It is also used in the production of reinforcing steel, which enhances the earthquake and heavy load resistance of buildings.

Automotive and Vehicle Industry: It is used in the structures of cars, trucks, and trains due to its durability and ability to withstand impacts. Stainless steel is used in the production of exhaust systems to prevent corrosion.

Heavy Industry and Machinery: It is a fundamental material in the production of machines and heavy equipment used in mining, agriculture, and manufacturing, as well as in the production of tools and mechanical parts such as gears and engines.

Shipbuilding and Aviation: It is used in the production of ship and boat structures due to its ability to withstand harsh marine environments, and it is also used in some parts of aircraft, although titanium and aluminum are more commonly used to reduce weight.

Energy and Infrastructure: It is used in oil and gas pipelines, nuclear, thermal, and electrical power plants due to its resistance to heat and pressure, and it is used in railway tracks due to its hardness and durability.

Household and Tool Industries: It is used in the production of household appliances such as refrigerators, washing machines, and kitchen tools like knives and stainless steel cookware.

Medicine and Precision Industries: Stainless steel is used in the production of medical tools such as scalpels, needles, and the metal structures of prosthetic limbs.

Thanks to these diverse uses, steel is an indispensable material in modern industrial and economic development.