An unusual situation has developed in the U.S. market, where domestic steel and aluminum prices have soared to nearly double the global average.
The first driver behind this is a robust import tariff policy. In June 2025, import tariffs on steel and aluminum were doubled to 50% under Section 232. This policy was further solidified in April 2026, when rules were clarified to apply the 50% tariff to the full value of any import "wholly or almost wholly" made of the metals. This effectively created a structural price floor for imports, making it difficult for foreign products to compete on price.
Adding to this, the second driver is geopolitical risk. Escalating military tensions in the Middle East since March 2026 have forced major shipping lines to reroute away from high-risk areas like the Red Sea. This has caused freight and insurance costs to skyrocket, leading to logistical delays and disrupting the supply of metals to the U.S. The cutoff of Iranian steel slabs and billets has further constrained import options, tightening the market even more.
The combination of these two factors has created a starkly divided reality in the U.S. metals market. Steel companies like Steel Dynamics and Nucor reported that their net income more than doubled in the first quarter of 2026. With tariffs neutralizing the price competitiveness of imports, domestic producers have been able to significantly raise their prices, leading to record profits.
In sharp contrast, downstream industries like the automotive sector have been hit hard. Ford warned that it expects to incur about $1 billion in additional annual costs due to tariffs. It is difficult to pass all of these surging raw material costs on to consumers, which inevitably squeezes corporate profit margins.
Ultimately, the current high-price environment is the result of an artificial barrier created by 'policy' combined with an unexpected variable from 'geopolitics'. As long as the tariff regime remains in place, prices are unlikely to stabilize easily. In the short term, the normalization of shipping routes in the Middle East holds the key to the market's direction.
- Glossary
- Section 232: A provision of the U.S. Trade Expansion Act of 1962 that allows the President to impose tariffs on imports for national security reasons.
- Hot-Rolled Coil (HRC): A common type of steel product, produced by rolling steel at high temperatures, used in construction, pipes, and automobile parts.
- Midwest Premium: An additional charge on top of the global aluminum price (set by the London Metal Exchange) to cover transportation and logistics costs for delivery in the U.S. Midwest region. It reflects regional supply and demand.