According to ICRA, the domestic steel industry is facing new challenges and looking for opportunities as a result of US President Donald Trump’s recent announcement to raise tariffs on imports of steel and aluminum significantly and to cancel exemptions and duty-free quotas for major suppliers like Canada, Brazil, the European Union (EU), Mexico, South Korea, Japan, Argentina, Australia, and Ukraine. All country-specific duty exemptions on steel imports granted under Section 232 of the Trade and Expansion Act of 1962 were revoked by the United States on February 11, 2025, with effect from March 12, 2025. As a result, these nations will no longer have any privileged market access granted to them in the form of tariff exemptions or tariff exemption volume quotas.
These few nations were able to obtain between 75 and 80 percent of the US steel import basket in recent years thanks to the exemptions. However, due to the consistent application of the 25% steel tax to all nations, all US steel imports will be treated equally as of March 12, 2025.
The local steel industry is negatively impacted by these trade restrictions, according to an ICRA assessment. Deliveries of about 4 mtpa to the US from South Korea and Japan, which up till now had privileged market access, might be partially switched to high-growth markets like India, it said. It is noteworthy that these two nations import between 40 and 55 percent of India’s total finished and semi-finished steel, placing them among the top three exporters of steel to India.
As they look for other markets for their previously American cargoes, South Korea and Japan may put further pressure on imports in FY2026 due to duty-free access provided by the free trade agreements (FTA) with India. Domestic steel prices may be impacted by this, which might further reduce industry profits in FY2026. China, on the other hand, is not as well-known in the US as South Korea and Japan since its steel exports are already subject to the 25% tariff. Therefore, following the announcement of US tariffs, the threat of rerouting trade flows from China has diminished.
The steel markets of the NAFTA nations of Canada and Mexico as well as the South American country of Brazil will be most severely impacted by the most recent announcement, according to ICRA. About 25–30% of Mexico’s yearly steel production and 55–60% of Canada’s were exported to the US. Similarly, ICRA said that about 10–15% of Brazil’s yearly steel production was exported to the United States.
Furthermore, unless the governments can find a middle ground on trade relations with the US in the upcoming months, the steel industry in these three countries looks set to enter a sustained period of deep downturn due to their cost inferiority over Asian suppliers and freight cost disadvantage for access to alternative large markets in Asia/Europe, according to ICRA.
