Seven Months in, a Look at US Steel and Aluminium Tariffs’ Market Implications

Editors’ note: MarketMinder Europe is nonpartisan, preferring no party or politician over any other. We seek only to ascertain tariffs’ potential implications for the economy and markets.

In the wake of US President Donald Trump’s 2 April Liberation Day tariff announcement, we thought warnings about it from commentators we follow would prove larger than their reality—a scary story typically associated with corrections, and a disconnect that primes market recovery.^[i] Now, with tariffs increasingly in the rearview, stocks scaling new heights and the benefits of hindsight, we think that outcome has held true.^[ii] We don’t think this means there are no effects, though—see American small businesses and consumers struggling with higher costs, farmers seeking relief and sector tariffs (e.g., on lumber and metals) weighing on demand.^[iii] But the parts of the stock market hit by these tariffs are generally quite small.^[iv] Still, even affected industries show a quiet reality to us: Tariffs hit the imposer hardest—they don’t protect.

Case in point: the Trump administration’s steel and aluminium tariffs. These levies were amongst the earliest announced—and the strictest, with few exemptions.^[v] And, unlike many others, they have gotten tougher all year.^[vi]

In February, Trump signed executive orders expanding his first-term tariffs on steel and aluminium under Section 232 of America’s 1962 Trade Expansion Act, authorising them on national security grounds.^[vii] They took effect on 12 March.^[viii] Besides raising aluminium tariffs to 25% from 10% previously (steel was already at 25%), they eliminated all exemptions—including those for most Western nations and the biggest exporters of those metals to the US, namely Canada.^[ix] Then in June, Trump doubled those rates to 50% (save the UK, based on the new trade deal’s terms) and broadened them in August to include more derivative products, like those contained in common household appliances.^[x] So whilst many tariffs have been diluted since their April introduction, these have done the reverse.^[xi]

Although tariffs are intended to nominally protect American production, we have found little indication they are boosting domestic output. The latest US steel and aluminium production levels remain below their pre-pandemic averages.^[xii] Sure, that could change. But generally speaking, in our experience, the more you tax something, the less you get of it. And with prices still low, there seems little incentive to us for US firms to ramp up. After Trump hiked steel and aluminium tariffs in his first administration, those higher costs caused downstream industries’ profits to shrink, weighing on demand and slashing investment.^[xiii]

We don’t see anything different this time around and neither, apparently, do markets. US steel and aluminium stocks are lagging non-US producers.^[xiv] As Exhibit 1 shows, US stocks in Steel (burgundy) and Aluminium (navy) industries initially jumped on Trump’s November 2024 election. But that rush of optimism appeared to fade swiftly. By the time promised tariffs were unveiled in February, US producers were already lagging their counterparts outside America.

Exhibit 1: America’s Steel & Aluminium Tariffs Haven’t Helped Their Stocks

Source: FactSet, as of 23/9/2025. MSCI USA IMI Steel and Aluminium subindustry returns with gross dividends divided by the respective MSCI World Ex. USA IMI subindustry returns with net dividends, 1/10/2024 – 22/9/2025. Presented in US dollars. Currency fluctuations between the dollar and pound may result in higher or lower investment returns. IMIs (Investable Market Indexes) measure the performance of 98% of listed market cap, used here to capture small-cap firms common in these industries. Please see our Annex below for an extended, five-year version of this chart.

That lag deepened after February’s expanded tariff restrictions and early April’s shock. Afterward, they seemed to recover somewhat alongside US stocks generally, as we think markets looked to avoid worst-case trade scenarios with Trump pausing or rolling back most tariffs.^[xv] But then they retrenched again when we think it became clear no relief was likely forthcoming with the administration implementing even stricter measures on steel and aluminium. (Note: We doubt this performance was related to May’s court challenge potentially striking down tariffs, as Section 232 tariffs aren’t part of that suit.)^[xvi]

So, in our view, tariffs don’t look great for America’s steel and aluminium industries or their stocks. The one silver lining to us: They are a tiny slice of the economy and markets. US primary metal manufacturing is less than 0.5% of its gross domestic product (GDP).^[xvii] American steel stocks’ 0.154% of US market cap (0.110% of the world) is smaller still, whilst American aluminium producers are a sliver of that (0.020% of the US and 0.015% of the world).^[xviii] This is one reason why we think economic growth and stocks overall have escaped tariffs largely unscathed—on the whole, their effects are much more marginal than many feared.

But markets suggest to us that where tariffs have been steeper than expected, they have hurt. And for those affected, we don’t want to minimise the challenges they face. Higher metals’ prices may solicit somewhat more business for domestic producers in the short run (where possible), but businesses—and, ultimately, households—buying from those protected industries may suffer greater costs. That could even mean, in time, that consumers substitute other goods for the protected ones, eroding longer-range demand. There may be winners and losers to this trade, but when the net result is weaker demand—and losers feeling losses much more than winners enjoy their gains—we think tariffs remain a headwind, especially on the country imposing them.

On this one corner of the market, though, steep metals tariffs are the exception, not the rule—and in the overall scheme of things, they are negligible so far, in our view. This could change, of course. Time will tell. So for investors, we will continue monitoring developments on this front.

Annex: America’s Steel & Aluminium Stocks Relative to Their Non-US Counterparts, September 2020 – September 2025

Source: FactSet, as of 23/9/2025. MSCI USA IMI Steel and Aluminium subindustry returns with gross dividends divided by the respective MSCI World Ex. USA IMI subindustry returns with net dividends, 22/9/2020 – 22/9/2025. Presented in US dollars. Currency fluctuations between the dollar and pound may result in higher or lower investment returns.

[i] A correction is a sharp, sentiment-fuelled drop of -10% to -20%.

[ii] Source: FactSet, as of 23/9/2025. Statement based on MSCI World Index returns with net dividends, 31/12/1969 – 22/9/2025.

[iii] “De Minimis Tariff Change Will Have Maximum Impact on Small Businesses,” Joan Verdon, Forbes, 29/8/2025. “China Buys Argentine Soybeans After Tax Drop, Leaving US Farmers Sidelined,” Naveen Thukral and Ella Cao, Reuters, 23/9/2025. Accessed via US News & World Report. “Lumber Duties Fail to Stop Price Slump as Housing Demand Falters,” Ilena Peng, Bloomberg, 19/9/2025. Accessed via Financial Post. “Copper Market in Turmoil After Trump Touts 50% Tariff on Imports,” Katharine Gemmell and Martin Ritchie, Bloomberg, 9/7/2025. Accessed via MSN.

[iv] Source: FactSet, as of 23/9/2025.

[v] “President Trump Expands Steel and Aluminum Tariffs to All Countries; Effective March 12, 2025,” David E. Bond, Gregory Spak, William Moran, Samuel Scoles, Matt Solomon and Ian Saccomanno, White & Case LLP, 17/2/2025.

[vi] Ibid.

[vii] Ibid.

[viii] Ibid.

[ix] Ibid.

[x] “Trump’s 50% Tariffs on Metals Come Into Effect,” Natalie Sherman, BBC, 4/6/2025. “Trump Expands 50% Steel and Aluminum Tariffs to Include 407 Additional Product Types,” Erin Doherty, CNBC, 19/8/2025.

[xi] “Trump 2.0 Tariff Tracker,” Michael Lowell, Philippe Heeren, Justin Angotti, Lizbeth Rodriguez-Johnson, Kirsten Lowell and Courtney E. Fisher, Trade Compliance Resource Hub, 18/9/2025.

[xii] Source: Federal Reserve Bank of St. Louis, as of 23/9/2025.

[xiii] “More Costly Steel Tariffs on the Horizon,” Clark Packard and Alfredo Carrillo Obregon, Cato, 10/2/2025. For the record, we also think protections like import quotas and tariffs contributed mightily to the industry’s lack of investment and competitiveness dating back to the 1960s and 1970s.

[xiv] Source: FactSet, as of 23/9/2025. MSCI USA IMI Steel and Aluminium subindustry returns with gross dividends divided by the respective MSCI World Ex. USA IMI subindustry returns with net dividends, in USD, 1/10/2024 – 22/9/2025.

[xv] “Trump Tariff Tracker,” Sophia Busch, Atlantic Council, 6/8/2025.

[xvi] “Court of Appeals Strikes Down IEEPA Tariffs, Setting Stage for Supreme Court Ruling,” Ashley Akers, Stephanie L. Connor, Robert A. Friedman, Andrew K. McAllister, Ronald A. Oleynik, Peter Tabor, Antonia I. Tzinova, Molly B. O’Casey and Manny Levitt, Holland & Knight, 9/9/2025.

[xvii] Source: Federal Reserve Bank of St. Louis, as of 23/9/2025. GDP is a government measure of economic output.

[xviii] Source: FactSet, as of 23/9/2025. MSCI USA IMIs’ Steel and Aluminium subindustry market capitalisations as a percent of MSCI USA and World IMIs’ market capitalisations, respectively. Market capitalisation (or cap) is a measure of a firm’s size calculated by multiplying its share price by the number of shares outstanding.