The U.S. government’s Section 232 tariffs on steel and aluminum imports, which were first introduced in 2018, have undergone adjustments recently. One significant update concerns the exclusion of recycled steel and aluminum scrap from these tariffs. According to the Washington-based Recycled Materials Association (ReMA), a detailed review of President Trump’s latest proclamations confirms that these materials will not be subject to the newly adjusted tariffs.
Impact on Recycled Steel and Aluminum
Adam Shaffer, assistant vice president of international trade and global affairs for ReMA, explained that scrap materials had been excluded from the tariffs from the outset in 2017 and 2018. The exemption remains intact as the tariffs on steel and aluminum are reinstated. This decision allows ferrous and aluminum scrap to continue trading freely across U.S. borders without facing the same tariff increases that now affect other forms of steel and aluminum imports.
“Scrap had been excluded from the beginning in 2017 and 2018, and will continue to be outside of the scope of these tariffs moving forward,” said Shaffer. This move comes as part of an ongoing strategy to maintain stable international trade of recycled materials while still protecting the domestic steel and aluminum production industries.
Changes in Tariff Rates
The most significant alteration in the tariffs is the increase in the aluminum tariff rate. Starting March 12, 2025, aluminum imports will be subject to a 25% tariff, up from the previous 10%. Notably, exemptions for certain countries, including Canada and Mexico, will also expire on this date, leading to the universal application of the 25% tariff rate on aluminum imports.
This increase in tariff rates is aimed at reducing the influx of unfairly priced imports that are considered to undermine U.S. industries. However, the U.S. government continues to focus on strengthening enforcement and addressing trade-distorting practices, especially those stemming from subsidies in foreign markets, particularly in China.
The Role of Reciprocal Tariffs
One major component of President Trump’s updated trade strategy involves the imposition of reciprocal tariffs on U.S. trading partners. While specific details about these tariffs are still pending, Shaffer mentioned that ReMA is closely monitoring how this development might affect traders dealing with recycled materials. The organization plans to work with the new administration to ensure that any additional tariffs do not adversely impact the recycling sector.
Industry Reactions
While the recycled materials sector remains exempt from the tariffs, other segments of the metal industry have shown mixed reactions to the changes. The Illinois-based Aluminum Extruders Council (AEC) has expressed support for the increased tariffs, viewing them as a necessary step to protect U.S. aluminum manufacturers. The AEC believes that closing loopholes in the Section 232 measures and applying stronger enforcement will level the playing field for U.S. manufacturers. By reducing unfair competition, the AEC believes that American manufacturers can increase their production capacity and bring back jobs that were previously lost to overseas producers.
Domestic Steel Production Levels
Meanwhile, the U.S. steel industry continues to adjust to these tariff changes. Domestic raw steel production saw a slight decrease in the week ending February 15, 2025, with a 0.3% drop compared to the previous week. This decline represents a 3.2% year-over-year reduction in steel production. U.S. steel mills operated at 75% capacity during this period, slightly lower than the 75.2% from the previous week and a notable drop from 77.7% capacity in February 2024.
Despite these figures, the American Iron and Steel Institute remains a strong advocate for tariffs as a protective measure for U.S. steel mills. Kevin Dempsey, AISI’s president and CEO, reaffirmed the association’s support for the president’s trade agenda, particularly in addressing global overcapacity and unfair government subsidies that distort the steel market.
Global Steel Overcapacity
The issue of global steel overcapacity remains a critical concern, particularly with China’s ongoing steel production. AISI pointed out that in 2024, global steel overcapacity reached 573 million metric tons. This surplus of steel, if left unaddressed, could lead to further surges in unfairly priced imports. The U.S. government’s move to adjust tariffs is part of its broader strategy to mitigate these impacts and protect domestic industries.
As the U.S. steel and aluminum industries navigate these changes, the role of tariffs in addressing trade imbalances and promoting fair competition remains a central point of discussion. The continued exclusion of scrap metal from the Section 232 tariffs is seen as a crucial element in ensuring the stability of the recycling sector, even as other tariffs are imposed on finished steel and aluminum imports.
