In the days and weeks after President Donald Trump slapped 25 percent tariffs on imported steel and aluminum, it was widely reported that American steel-consuming companies were bracing for higher prices.
Now, a little more than six weeks since the tariff announcement, we have a better picture of the consequences of Trump's trade policy.
This chart—published by SteelBenchmarker, a firm that tracks the price of the commodity across different markets—shows the average price (in dollars per metric tonne) of hot-rolled band (HRB), one of the most commonly used types of steel. The dark blue line represents the United States' average price, while the light blue represents the price of steel produced in Western Europe, the red line represents China, and the pink line shows what SteelBenchmarker refers to as the “World Export” market: steel produced in other places, including Japan and South Korea.
The chart is notable because it shows how American-made steel has fluctuated in price relative to foreign-made alternative supplies. It's pretty plain that American steel historically has been a bit more expensive than steel made anywhere else in the world, but also that the price of American steel typically follows the same ebbs and flows as other markets. That's because steel is a globally traded commodity and price fluctuations in one place are going to affect pretty much everyone equally.
Is this good news for American steel manufacturers? Well, they are now able to charge higher prices for their product. But steelmaking is a relatively small part of the American economy. According to 2015 Census data, steel mills employed about 140,000 Americans and added about $36 billion to the economy that year, but steel-consuming industries employed more than 6.5 million Americans and added $1 trillion to the economy.
As a result, a large sector of the American economy—businesses that consume steel to make everything from beer kegs to automobiles—are stuck with a difficult choice. Buy cheaper foreign steel and pay 25% import taxes to the federal government, or turn to American suppliers and get stuck with a significantly higher purchase price.