President Trump’s decision to impose tariffs on steel and aluminum imports is stirring concern within the automotive industry. This move could hike up production costs for U.S. carmakers, who are already grappling with potential steel price hikes due to other administration policies.
A hot topic among auto executives recently has been Nippon Steel’s attempt to acquire U.S. Steel. They were hopeful that Trump might entertain negotiations to let the acquisition proceed. However, the president made it clear last month that he is against the proposed deal.
There is a strong belief among several industry leaders that this merger could have boosted competition and enhanced supply within the American steel sector, ultimately easing steel prices.
Currently, in the U.S., the primary producers of high-finish steel—preferred by automakers—are U.S. Steel and Cleveland-Cliffs. Cleveland-Cliffs has consistently pursued a merger with U.S. Steel, but this has raised concerns about the potential for a monopoly, which could empower them to inflate prices.
In contrast, many industry groups anticipated that Nippon Steel’s acquisition would maintain market competition. The Alliance for Automotive Innovation, an influential trade group representing major automakers from the U.S., Japan, and Europe, backed Nippon Steel’s bid, arguing that a Cleveland-Cliffs merger would lead to “anti-competitive pricing of materials.”
After former President Joseph R. Biden Jr. blocked the deal in January, Nippon Steel did not give up and continued lobbying to revive it. Meanwhile, Cleveland-Cliffs has signaled renewed interest in financially unstable U.S. Steel. Just last month, Trump reiterated his stance that U.S. Steel should remain under American ownership, blocking any attempts by Nippon Steel to secure a controlling interest in it.
Automakers, already navigating challenges like competition from Chinese automakers, expensive tech transitions, and cooling U.S. consumer spending, are bracing for these new tariffs to squeeze their margins even more. The 25 percent tariffs, effective since Wednesday, are projected by Wolfe Research to push U.S. steel prices up by about 16 percent compared to what’s expected in 2024.
