United States President Donald Trump’s threatened steel tariffs that don’t kick in for two weeks are impacting U.S. buyers who already are seeing American-made metal cost more than imports.

The benchmark price for domestic steel touched more than US$900 a ton this week, up almost one-fourth this year, in anticipation of the imminent 25 per cent levy on foreign supplies. That surge means U.S. prices have now moved above par with imported steel, according to people active in the market who asked not to be named discussing non-public information.

“What we’re seeing so far happen is mills capitalize on the tariffs and uncertainty of tariffs, and they’ve been able to raise prices such that at US$900 a ton it’s more than what would happen to price with an actual 25 per cent tariff implemented,” Timna Tanners, an analyst at Wolfe Research, said during a telephone interview. “This isn’t the desired outcome Trump has articulated.”

Metal shipments are pouring into the U.S. from all over the world, including cargoes from Egypt, Algeria, Malaysia, Brazil and Vietnam, according to a person familiar with the flows. The influx comes amid relatively anemic U.S. steel demand as high borrowing costs make it expensive for buyers to move ahead with projects in everything from construction to appliance manufacturing.

Trump earlier this month ordered a 25 per cent tariff on steel and aluminum imports, and in the process announced he would rescind all existing country-level exemptions. The spectre of a protectionist wall emboldened domestic steelmakers like Nucor Corp., Cleveland-Cliffs Inc., United States Steel Corp. and Steel Dynamics Inc. to raise prices.

As recently as five weeks ago, a ton of steel was selling for less than US$700. But by this week, domestic producers were quoting their customers prices as high as US$1,000, according to people familiar with the situation — levels not seen since the beginning of 2024. The conundrum is that tariff threats have raised prices even as demand remains unchanged.

Domestic hot-rolled coil, the benchmark steel product, is 23 per cent more expensive than imported supplies, researcher Steel Market Update said this week.

Meanwhile, some Canadian and Mexican steelmakers are telling customers they are refusing new orders. The measures have put Algoma Steel Group Inc.’s order books under “extreme pressure,” said chief executive Michael Garcia.

Canadian steel producers have little choice but to keep selling into the U.S. while global oversupply of the material constrains demand in other markets. The industry is more likely to pass higher costs onto customers than divert shipments elsewhere, said Catherine Cobden, president of the Canadian Steel Producers Association. Shipments to Europe or beyond are too expensive for Canadian steelmakers, she noted.

“In a context of over-capacity, where there’s too much steel being dumped in everybody’s market, it’s very difficult to shift markets,” Cobden said during an interview.

Canada’s steel business is almost exclusively dependent on the U.S., which brings in the bulk of its foreign imports from its neighbour to the north. The industry feeds U.S. automakers and the construction sector with high-grade material. U.S. consumption of steel totalled about 93 million tons in 2023, according to data from the U.S. Geological Survey, with net imports accounting for 13 per cent of that demand.

Canada’s steelmakers sell less than 0.1 per cent of their output to European Union buyers, Cobden said.

“We have long-time supply relationships in the US, so we’d have to have conversations with them about what the price would need to be,” she said on BNN Bloomberg this week. “Both of us would kind of share the pain of tariffs.”

Bloomberg.com