The 50% tariff imposed by the US on steel and aluminum imports in June 2025 has significantly reshaped trade flows, escalated prices, and spurred new investment within the domestic industry. This report, the first in a three-part series, delves into the multifaceted impacts observed one year after its implementation.

When US President Donald Trump enacted a 50% tariff on steel and aluminum imports in June 2025, the stated objective was to revitalize the nation’s industrial base. Officials aimed to level the playing field for domestic producers, who had faced intense competition from inexpensive imported materials.

A year later, US steel producers are indeed experiencing the intended benefits of these tariffs. Steel imports have plummeted, enabling domestic prices to climb faster than global rates. Concurrently, US production and capacity utilization have seen gradual increases, a direct consequence of reduced imports, despite overall demand remaining largely unchanged.

However, the anticipated manufacturing boom for steel consumers has yet to fully materialize. The tariffs have notably driven up input costs for several downstream sectors, consequently eroding their profit margins.

“Production is rising, and the industry is in a stronger position than 18 months ago,” Tiago Vespoli, a senior research analyst at consulting firm Wood Mackenzie, informed Platts. “But the output response has been gradual, reflecting the realities of building new capacity, and the broader manufacturing sector has yet to show a jobs uplift that can be tied directly to the steel tariff.”

Higher costs for steel end-users

Data from the US Bureau of Labor Statistics reveals a significant increase in material costs for end-users. The producer price index for iron and steel surged by 10.4% between April 2025 and April 2026, while the steel mill products index rose by 13.3%. These materials are critical inputs for the construction and automotive sectors, which together accounted for 46% of net steel shipments in 2025, according to the US Geological Survey.

Prior to the implementation of Trump’s tariff, input costs for these industries had remained relatively stable since 2023, as noted by Zack Fritz, an economist for the trade group Associated Builders and Contractors.

“Higher input prices mean higher construction costs, and that means fewer projects pencil out and proceed,” Fritz told Platts. “I think that’s been a contributor to the fact that nonresidential construction spending has been in a state of decline for some time now.”

Nonresidential construction spending in the US reached a peak of $791 billion in December 2023, according to Census Bureau data. By March, spending had decreased to $729.3 billion, marking a 2.1% decline from March 2025.

This decline is primarily attributed to the conclusion of major projects incentivized by Biden-era legislation, specifically the bipartisan infrastructure act and the CHIPS and Science Act, which injected substantial funds into the construction sector. Nevertheless, elevated input costs have also played a contributing role.

The escalation in input costs has compelled downstream sectors, including automotive and metals fabrication, to engage in complex negotiations within their supply chains as they contend with tighter profit margins.

Platts assessed the TSI US EXW Indiana price for hot rolled coils of steel at $1,201.50/metric ton on May 26. This represents a 31% increase since Trump imposed the steel tariff and a 58% rise since he took office.

Notably, the US price for hot rolled coil is more than double the Southeast Asia price of $571/mt, as assessed on the same date, May 26.

“The cost recovery within the supply chain to account for the tariffs is something that many suppliers are very focused on,” Ann Marie Uetz, an automotive supply chain attorney with Foley & Lardner, explained to Platts. “It’s really negotiations with their customers, all the way up to the [original equipment manufacturers], for that cost recovery for tariffs.”

A series of charts visually demonstrates the decline in US steel imports and the concurrent rise in prices following the imposition of the 50% tariff in June 2025.

Limited capex from end-users

The domestic steel industry is currently experiencing a substantial $50 billion wave of capital spending, according to Vespoli. He highlighted that Nucor Corp. alone has several significant projects underway, including a new melt shop in Arizona, a rebar micro mill in North Carolina, and new galvanizing lines at its Indiana and South Carolina facilities.

In contrast, end-users have been slower to commit to new capital expenditures. The most notable investment announcement since the tariffs took effect is Toyota Motor’s $2 billion commitment towards a new vehicle assembly line at its Texas manufacturing complex.

Among heavy machinery manufacturers, Caterpillar is planning a $725 million expansion of an engine production facility in Indiana, and Volvo Construction Equipment is increasing excavator production in Pennsylvania. However, it is important to note that the machinery and equipment sector accounted for only 3% of total steel consumption in 2024, according to the US Geological Survey.

Kevin Dempsey, President of the American Iron and Steel Institute, told Platts that additional policies beyond the 50% tariff will be necessary to stimulate growth in downstream steel sectors.

Environmental regulations and permitting policies “are going to be really important for a lot of downstream industries,” Dempsey stated. “And, you know, nothing happens, especially in government, as quickly as you would like, but I think things are moving in the right direction.”

Job numbers unchanged

Employment within the general US manufacturing sector has remained largely flat at 12.6 million workers through early 2026. Furthermore, the ISM manufacturing employment index suggests that many subsectors are experiencing contraction rather than expansion, Vespoli noted.

While the steel industry has added a few hundred new jobs over the past year due to increased capacity by steel producers, overall employment in iron and steel mills and ferroalloy manufacturing has remained largely stable.

The sector employed 84,300 workers in March, a slight decrease from 84,500 workers in March 2025, based on the most recent data from the Bureau of Labor Statistics. Total employees briefly reached 85,100 in January before experiencing a marginal decline.

However, the primary impact of the tariff on domestic manufacturing is not predominantly reflected in employment figures. Instead, its influence is more pronounced in input costs, sourcing decisions, and trade flows, according to Marc Gilbert, global lead at Boston Consulting Group’s Center for Geopolitics.

Moreover, a recent revision to the tariffs framework has extended similar duties to steel-derivative products, encompassing machinery and automotive components.

“For manufacturers exposed to tariffed materials, the questions of whether to shift sourcing, redesign products or relocate manufacturing capacity to the US require a long-term view and confidence on the return in invested capital,” Gilbert concluded.