As major exporters brace for impact and manufacturing faces soaring costs due to increased steel tariffs, consumers could be hit hardest, with average U.S. households facing a potential USD 2,500 hike in yearly expenses.
Earlier this month, President Trump doubled steel and aluminium tariffs to 50%, citing national security and unfair trade. Calling it a “major economic realignment,” the move builds on the 2018 tariffs under Section 232. Adviser Kevin Hassett said 25% helped but wasn’t enough. The White House blames subsidized Chinese metals for harming U.S. producers.
Kevin Dempsey, head of the American Iron and Steel Institute (AISI), welcomed President Trump’s move to double steel tariffs from 25% to 50%, and said, “This tariff action will help prevent new surges in imports that would injure American steel producers and their workers. AISI applauded the president’s action to increase the tariffs on foreign steel and keep the American steel industry strong.”
Major trade partners—Canada, Mexico, the EU, China, and India—are already signaling countermeasures, from retaliatory tariffs to potential WTO challenges. The European Commission warned of increased economic uncertainty, while India exported $4.56 billion worth of metals to the U.S. in FY25—mostly from small and medium enterprises now staring at potential job losses.
The U.S. relies on Canada for two-thirds of its primary aluminium and still imports about 40% of specialized steel products like pipes and tubes essential to energy, auto, and construction sectors. Tariffs on these imports are set to raise production costs across industries.
As a result, U.S. sectors such as automotive, appliances, oil and gas, construction, and machinery manufacturing are all facing significant cost pressures.
Canadian manufacturers face a dual challenge. Canada, despite being the top aluminum supplier to the U.S., is facing a domestic crunch. As Canadian producers lose U.S. market share, local steel buyers may face price hikes, while manufacturers relying on specialty imports from the U.S. brace for possible retaliatory tariffs. This puts both producers and buyers under dual pressure.
Mexican President Claudia Sheinbaum has warned that if no agreement is reached, her government will unveil new measures in response to the increased U.S. tariffs on steel and aluminium. Mexico is one of the top exporters of steel to the U.S., typically ranking among the top four suppliers along with Canada, Brazil, and South Korea. U.S. construction, auto, and manufacturing sectors depend on certain grades of steel that Mexico supplies.
Beyond rising input prices, businesses now face higher compliance costs—needing to invest in supply chain tracking, customs paperwork, and trade expertise, all with little time to adapt. This sudden shift forces many to either absorb the added expense or pass it on to consumers.
India exported $4.56 billion worth of steel, aluminium, and related goods to the U.S. in FY25—largely from small and medium enterprises—putting thousands of jobs at risk. Other major exporters like South Korea and Vietnam face similar threats. The 50% tariff hike could disrupt their supply chains, trigger job losses, and push firms to redirect exports elsewhere.
While China faces deeper isolation, Vietnam may get caught in the crossfire as a transshipment hub, and South Korea prepares for tighter trade terms. All three are now expected to recalibrate supply chains, diversify export markets, and turn to regional trade pacts to manage the fallout.
Brazil is a top exporter to the US, however, many producers sell more domestically. This limits direct economic losses but still challenges their export strategies
In the U.S., sectors like auto, construction, energy, appliances, and food packaging are feeling the pinch. About 40% of specialized steel—like pipes used in oil and gas—comes from abroad, and these tariffs will raise costs. A midsize carmaker could see $1,000–$2,000 added per vehicle. For smaller businesses, the ripple effects could mean contract renegotiations, sourcing struggles, delayed investments, or layoffs.
While the companies will also see a rise in compliance cost, the broader impact, however, lands on consumers. Yale economist Martha Gimbel estimates the tariff hike could raise household costs by $2,500 a year, disproportionately hurting lower-income families. “Prices for everything from cars to canned soup will go up—and fast,” says Gimbel.
