Trade Cases

CRU View: What to Expect Now that the U.S. Has Lifted the Steel Tariffs

May 21, 2019

By CRU Principal Analyst Josh Spoores and Analyst Ryan McKinley

Steel imports to the U.S. from Canada and Mexico prior to the S232 tariffs were near 12 Mt on an annualized basis. Data from this past March and April show arrivals closer to 7.5 Mt annually. With the end of the S232 on the U.S.’s closest trading partners, we would expect to see more steel imports in the U.S. from both Canada and Mexico. Tempering this, though, is some gain in exports of steel from the U.S. as retaliatory tariffs are also eliminated.

Not only will the available supply of steel increase for buyers in the U.S., but we will certainly see more competition emerge as producers in Canada and Mexico look to re-establish their supply chains in the NAFTA region. As this comes about, our sheet and plate prices will remain under pressure as this supply, as well as the new threat of supply from Turkey, will create a ceiling on steel prices in the U.S.

For long products, the reduction of tariffs on Turkey will likely result in the resumption of imports, especially for rebar. Turkish mills have struggled to find viable end markets with protective tariffs in both the U.S. and EU, but are now in a position to undercut European rebar exporters to the U.S. We expect these incoming import volumes to weigh on U.S. domestic long product prices.

The reduction in steel tariffs on Turkey will also likely mean a drop in scrap prices in June. While Turkish demand for scrap imports will rise—creating upward price pressure for U.S. exporters—the drop in finished steel prices domestically alongside a scrap supply surplus will more than offset this higher export demand. Although there is a slight possibility for unchanged prices, we expect a $10 /l.ton or more price drop in scrap prices in June.

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