US President Donald Trump announced that the 25% Section 232 import tariff on Canadian origin steel, which began on Wednesday (March 12), will double to 50%.

The announcement was made through social media, following Ontario Premier Doug Ford's vow to impose a 25% surcharge on electricity exports. The energy surcharge announced in retaliation for the 25% import tariff in the United States will affect 1.5 million households and businesses in Minnesota, Michigan, and New York.  

Canada is one of the largest steel trading partners of the United States, and as a net importer, the United States relies on Canadian steel to operate its manufacturing industry.

The steel prices in the United States are already much higher than in other parts of the world, to the point where American buyers only need to pay Canadian dollars plus tariffs in the short term. Assuming the 50% tariff on Canadian steel continues to exist, the supply chain will be adjusted, forcing Canadian steel mills to reduce production, and US steel prices will remain artificially high in the coming months.

According to data from the American Iron and Steel Institute, imports account for 23% of finished steel consumption in the United States. Imports from Canada account for 6.3%, and Canada is the largest exporter to the United States.  

In 2024, Canada exported nearly 6 million tons of steel to the United States, accounting for 23% of its total steel imports. According to data from the US Department of Commerce, Canada exported 927000 tons of hot-dip galvanized sheet and 550000 tons of cold-rolled sheet, accounting for 34% and 38% of the total steel imports of these products in the United States, respectively.  

However, the supply of hot-rolled sheets, plates, and wires from Canada is a more concerning issue for steel buyers. Last year, the United States imported 910000 tons of hot-rolled thin plates and 604000 tons of continuous rolled plates (coils) from Canada, accounting for 48% and 60% of the total imports of these types of steel in the United States, respectively. The recent increase in domestic production capacity for thin plates and sheets will help alleviate some of the supply shock from US steel buyers, but it is expected that there will be interruptions in the short term.  

In 2024, Canada imported over 450000 tons of wire, accounting for 46% of the total wire imports to the United States. After the idle wire production of Liberty Steel in South Carolina and Illinois in 2024, these imports have become even more important for domestic supply. According to the World Steel Association, the wire production in the United States in 2023 will be 2.4 million tons, but this number has significantly decreased since then due to the closure of these factories.