INTERVIEW: AISI says US 25% steel tariff ‘may not be adequate’ to stave off global overproduction

US President Donald Trump's trade actions are largely beneficial to the US steel industry, but Trump's 25% tariff on all steel imports may not be enough to fend off a surge in Asian steel production, Kevin Dempsey, president and CEO of the American Iron and Steel Institute, said in a recent interview with Platts, part of S&P Global Commodity Insights.

AISI is a trade group representing US steel producers, including major companies like Cleveland-Cliffs and ArcelorMittal. AISI has been a vocal supporter of Trump's recent actions, including updated steel tariffs, auto tariffs and an executive order aimed at reviving the US shipbuilding sector. However, the trade group says further government action may be necessary to protect US steel from a surge in exports from countries such as South Korea and Vietnam.

This interview has been edited for space and clarity.

Q: It's been a month since President Trump removed all exemptions from steel tariffs and imposed a 25% rate on all imports. What impact has the US steel industry seen so far from this action?

A: I think it's too early to see any real trends. We think the broader coverage is appropriate. I think there's concern about whether that 25% tariff will adequately restrain imports. There's a very significant export-driven steel industry in South Korea, and they've been shipping large amounts, especially of pipe products like [Oil Country Tubular Goods]. We're going to be watching that closely.

We're also going to be watching countries like Vietnam, which has seen a very substantial increase in their exports of steel to the US. We're going to have to watch to see if we need some further policy adjustments to consider the fact that the 25% tariff may not be adequate in every case to address the amount of steel being exported at very low prices because there's so much overproduction of steel globally.

Q: Trump has imposed a 10% baseline tariff for all imports, excluding Canada and Mexico. He also briefly implemented "reciprocal" tariffs before pausing them for 90 days. How does the US steel industry view these reciprocal tariffs?

A: The reciprocal tariffs are intended, from what the administration has said, to address broadly unfair trade practices. And obviously, we're very familiar with that in the steel industry. I think it's a very expansive effort by the administration to try to address this with a large number of countries.

I'll admit, I was surprised by the breadth of coverage in terms of the number of countries they're trying to cover and the range of sectors. There are a lot of unfair trade practices, trade barriers around the world and many of which affect steel, but some of which also affect downstream customer industries. They've launched an effort at negotiations with a large number of countries. I'll be honest, I'm not sure we're going to really be able to get through all of it in 90 days, but I think it's good to get started and try to cover as much as they can.

Q: Steel was not included in the 10% baseline tariffs, but some important inputs for steel were, such as pig iron and direct-reduced iron. Is this tariff on steel inputs a concern for the sector?

A: I don't think that's a major concern for steel production, frankly. I think we're going to see more investment in DRI production in the United States. We have iron ore and natural gas. We have a number of companies that have DRI facilities, and we have integrated capacity available to make more pig iron.

Q: There have been fears of a general economic slowdown due to such a broad tariff policy; is this a concern for AISI?

A: At this point, I think the reciprocal tariffs are being used to create leverage for some very significant trade negotiations. It's too early to say what's the overall impact going to be. One of the biggest factors that's unfortunately keeping our economy from growing as fast as it could is that interest rates remain still very high. Compared to recent years, the relatively high interest rates have a depressing effect on economic activity, and that directly affects construction and steel demand.

Q: The Trump administration has taken actions to revitalize the US shipbuilding sector through an executive order and the US Trade Representative's proposal to add docking fees to China-affiliated vessels. What's AISI's view on this?

A: I think there's a lot that needs to be done by both the administration and Congress to incentivize growth in domestic shipbuilding. There was a time when many of the major steel producers in the US had their own shipbuilding arms. Shipbuilding is a major consumption sector for steel.

Unfortunately, most of that has gone to Asia. Originally it went to Japan and Korea; now it's dominated by China. From a national security perspective, we need to revitalize shipbuilding in the US. We think all those policies as outlined in the president's executive order and the legislation are well overdue. What's going to happen on the USTR side of things and the various proposals I think we have to wait to see.

Q: What do you expect the impact of the US' new tariffs on auto imports to be?

A: The biggest drag on growth in the automotive sector has been high interest rates that have really made it a lot more expensive for people to buy new cars. President Trump's auto tariffs are looking at the longer term and trying to incentivize more construction of cars in the United States. And that will be very positive for steel producers.

That will take some time. You don't build auto plants overnight, but I think that's going to provide that longer-term incentive.