US president Donald Trump imposed a sweeping tariff regime Wednesday that will raise the cost of raw materials for steelmakers that operate electric arc furnaces.
Pig iron from Brazil, direct reduced iron from Trinidad, and ferrous scrap from the UK will face 10pc tariffs. Ferrous scrap imports from the EU will face a 20pc levy. The tariffs begin April 5 and will not include shipments already in transit before that date.
Two notable exceptions from the announced tariffs are scrap from Mexico and Canada.
Canadian and Mexican scrap
In February and March, Trump placed 25pc taxes on all imports from Mexico and Canada, before rescinding the tariffs days later in both instances.
Many Canadian dealers paused US-bound shipments because of the uncertainty. The shifting trade policy partially caused US ferrous scrap imports from Canada to fall to 188,000 metric tonnes (t) in February, the lowest volume since May 2020 during the height of the pandemic, US customs data shows.
Scrap dealers in Canada have begun to breathe a sigh of relief. The paused Canadian scrap shipments to the US will likely restart in April because Trump excluded the country from the latest tranche of tariffs, a Canadian dealer told Argus.
Separate 25pc tariffs on Canadian steel, aluminum and automobiles are still in effect, however. The steel tariffs could temper flat-rolled steel mills' appetite for scrap this month because they rely on the US market for steel sales, the dealer noted.
Brazilian pig iron and Trinidadian direct reduced iron
Some US steel mills pivoted to the pig iron market in February and March because of the tariff uncertainty around Canadian and Mexican scrap.
The move contributed to soaring US imports of pig iron in March. The US imported an estimated 535,000t of pig iron from all countries last month, more than double the total from the previous March, according to US vessel manifest data and US customs data.
Vessel manifest data shows that the total included about 380,000t of pig iron last month from Brazil, the largest supplier to the US market. That could be the highest volume of Brazilian pig iron imported since January 2024 if the official US customs data confirms the sum.
Trump's 10pc tariffs on imports from Brazil, Ukraine and other pig iron producing countries could drive up costs for US steelmakers, especially those with electric arc furnaces (EAF).
The 10pc levy will also apply to Nucor's direct reduced iron (DRI) plant in Trinidad. Nucor, the US' largest EAF steelmaker, imports about 125,000t of DRI each month from its Trinidad plant. Nucor did not respond to a request for comment on the Trinidad tariffs.
The tariffs on iron metallics announced Wednesday could cause steelmakers to raise their steel selling prices even more. US hot-rolled coil prices have already risen by 22pc since Trump announced the 25pc steel tariffs on 10 February.
European and UK scrap
EAF steelmakers in the US often look to Europe for prime scrap when US prices surge. That occurred in the first quarter of this year, when average #1 busheling prices rose by 25pc to $470/gross ton (gt) during that time.
The US imported about 163,000t of busheling and shredded scrap in bulk cargoes from Europe last month, according to vessel manifest data. Not since June 2022 had the US imported more bulk ferrous scrap from Europe, US customs data showed.
The new tariffs on UK and EU-origin scrap could make locally sourced scrap more attractive to US steelmakers.
