American steel makers are raising prices, forcing new costs onto domestic manufacturers that make everything from cars to military tanks. The increases come on the back of President Trump’s tariffs on steel and aluminum.
Two big American producers, Cleveland-Cliffs and Steel Dynamics, reported on Monday that they had charged more for their products in the second quarter of this year than they did in the first quarter.
About a fifth of the steel sold in the United States is imported. The steel tariffs, which were raised last month to 50 percent from 25 percent, have made imports of the metal much more expensive, giving American steel mills the leeway to increase their prices. And as imports have declined, American producers have more power to opportunistically increase their prices, buyers said.
“You always see that as one of the traps of a tariff,” said John O’Leary, the chief executive of Daimler Truck North America, which buys large amounts of steel to make Freightliner and Western Star trucks and Thomas Built school buses. American steel makers, he said, now have “more headroom to be able to raise the price.”
Daimler Truck has tried to pass on some of the costs of the tariffs on steel and aluminum, the other metal on which the Trump administration has imposed tariffs. When steel and aluminum tariffs were at 25 percent, the company added approximately $3,500 to the price of a Thomas Built school bus, which on average costs around $100,000.
When asked if Daimler would raise prices further now that the tariffs had reached 50 percent, Mr. O’Leary said it was hard to pass on extra costs to customers in the current market.
The tariffs come at a hard time for Daimler Truck, which is grappling with a dip in demand for its trucks. The company said last week that it had reduced its work force by around 2,000 employees across four facilities in the United States and one in Mexico.
In the second quarter, the average price of Steel Dynamics’ steel was $1,134 per ton, up from $998 in the first quarter. Cleveland-Cliffs sold steel for an average price of $1,015 a ton in the second quarter, up from $980 in the first quarter. Government price data shows that domestic steel producers have raised prices 16 percent this year.
Cleveland-Cliffs’ chief executive, Lourenco Goncalves, said on a call with analysts on Monday that the company “showed strong improvements in pricing,” and that Mr. Trump’s tariffs had “played a significant role in supporting the domestic steel industry.”
Mr. Goncalves defended the steel tariffs, contending that foreign steel producers benefited from subsidies and paid their workers lower wages. He said Mr. Trump’s tariffs on vehicles were helping the domestic automotive industry.
“They’re profit-maximizing firms,” said Thomas McCartin, a senior economist with the pricing and purchasing service at S&P Global Market Intelligence, referring to the steel producers. “Domestic mills are going to try to get as much as they can.”
Mark Millett, Steel Dynamics’ chief executive, said in a news release on Monday that higher steel prices had bolstered profits, but he added that uncertainty about trade policy continued “to cause hesitancy in customer order patterns across our businesses.”
Neither company responded to questions about its steel prices.
Steel imports through May were down 6.2 percent from the same period in 2024, according to the American Iron and Steel Institute. Canada, Brazil, South Korea and Mexico are the biggest exporters of steel to the United States. Mr. Trump imposed a 25 percent tariff on steel in 2018 during his first administration, using a legal statute related to national security, known as Section 232. But countries that export a lot of steel to the United States were given exemptions by the first Trump administration and the Biden administration.
When Mr. Trump returned to office, he ended the national exemptions, and the tariffs were broadened to include more items — like wire, pipes and household appliances — that are made out of or contain a lot of steel. Last month, Japan’s Nippon Steel agreed to buy U.S. Steel, a large domestic producer, and gave the U.S. government a stake that provides it with significant control over the combined company.
Mr. Trump has said steel tariffs are needed to ensure that domestic producers are strong enough to supply steel to companies that make military equipment.
But analysts say the American steel industry is more than capable of supplying the U.S. military. Jim Mattis, a defense secretary in the first Trump administration, said in a 2018 memo that the military’s requirements of steel and aluminum were equivalent to only about 3 percent of U.S. production of each metal.
American-made steel is the most expensive in the world, and some analysts say domestic producers have gained a tight grip on American trade policy that allows them to charge more.
“It’s just pure protectionism and cronyism,” said Scott Lincicome, a vice president for trade policy at the Cato Institute, a research organization that favors free markets.
Mr. Trump has not imposed tariffs on imports iron ore, pig iron and other products that many American steel producers use to make the metal. But that could change if he ends up imposing a 50 percent tariff on all imports from Brazil, a big supplier of such raw materials to American mills. On Monday, Mr. Goncalves said that Cleveland-Cliffs does not import pig iron from Brazil and that there was “no justification to exempt imported pig iron from tariffs.”
Peter Eavis reports on the business of moving stuff around the world.
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