WSJ What’s News - Why Trump’s Tariffs Will Push Up U.S. Steel Prices

Episode Date: March 12, 2025

A.M. Edition for Mar. 12. As American tariffs on imported steel and aluminum take effect, BCG’s Nicole Voigt explains why domestic manufacturers are likely to respond with price hikes on everything from cars to pumps to screws. Plus, the House passes a GOP measure to avert a looming government shutdown. And voters in Greenland elect a party opposed to a U.S. takeover. Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

This episode is sponsored by Northern Trust Wealth Management. There is more to being a successful entrepreneur than just good business practices. What is it about an entrepreneur's childhood that helped fuel their entrepreneurial spirit? What are entrepreneurs doing to cultivate this spirit in their own children and build a legacy beyond their business? Tune in each month to the Road to Why podcast by the Northern Trust Institute, where host Eric Schapea dives deeper with leading entrepreneurs on these topics and more. Find the road to why where you listen to your favorite podcasts. The EU hits back as U.S. steel and aluminum tariffs kick in. We'll look at how President

Trump's latest trade moves will impact the global metals market. Plus Ireland's tariff fears threaten to overshadow St. Patrick's Day festivities at the White House and voters in Greenland slow walk independence as Washington sizes up the territory's minerals. So if President Trump was hoping for an opening for further American influence, that has sort of been fairly closed off with this election. It's Wednesday, March 12th. I'm Luke Vargas for the Wall Street Journal and here is the AM edition of What's News, the top headlines and business stories moving your world today. 25% US tariffs on all steel and aluminum imports went into effect at midnight. The measures bear similarity to 25% steel and 10% aluminum tariffs that President Trump

embraced in his first term and aims to address what Trump and his team say is an unfair global steel trade in which foreign government subsidies and other trade barriers allow countries to sell steel to American customers cheaper than US-made metals. So what effect will the new tariffs have on America's trading partners and its domestic manufacturers? Nicole Vogt is a managing director at Boston Consulting Group and the firm's global metals co-lead. Nicole, what does this US action mean for steel producers around the world?

Yeah, basically the whole world is watching that. Yes, I mean, to get some facts and figures here. I mean, the US, I mean, let's stick with steel, has a demand of 90 million tons roughly and imported 25 million tons. And now with the Trump legislation, everything will be under tariffs. And so, you know, what is the impact on that? And to be honest, short term, the US will most likely be impacted because you cannot change that quickly your production setup than to produce everything

locally. And of course, there's a secondary effect with we getting rid of the exemptions, so the country exemptions and the company exemptions, we have now a level playing field for all the importers. So you have not an advantage anymore if you had quotas in the past. So suddenly, everybody needs to compete again on landed cost US and this is why everybody is watching this. In terms of, I mean, we can look back to Trump's first term For an example of how these similar tariffs went into effect

And you did see a lot of countries end up as you alluded to they're getting exclusions or seeing their products put under duty-free quotas Australia Brazil Canada Mexico Japan South Korea the EU and the UK among others this time around the White House is saying we're not going to do that. Those were loopholes effectively that let Chinese steal into the US. And assuming that is the case, I'm curious how the global production landscape for these metals has changed since Trump's first term. Have they in a way that might alter how these American measures go into effect? Well, the thing is not a lot changed actually. If we look at US steel demand and US imports,

since Trump's first term, the US built up roughly 20% of the capacity. However, imports only declined by 5%. It seems that the US is not able to substitute yet for the imports. So my hypothesis would be in the future standard quality material like cold rolled or galvanized material could be produced domestically. However the big question will be what happens to specialty materials such as tin plate, tool steel or some stainless applications. Here we had significant company exemptions and now it's unclear if US players will build this up if we will see local capacity. Of course, this depends on the business case. You need investments, you need time and most important new capabilities in your workforce to produce those products. As we look to the US Nicole,

which industries would we be most likely to see affected by these tariffs? I know automakers may be one of them. We've already seen them hit by the tariffs on Mexico and Canada. What else is worth watching? Well to be honest I think all downstream steel intensive good manufacturers, small medium enterprises Mexico and Canada. What else is worth watching? Well, to be honest, I think all downstream steel intensive good manufacturers, small medium enterprises like companies who produce pumps and screws, because the secondary effect is that steel prices go up. And we see this already just from the announcement to end of last week, steel prices in the US went up more than 25 percent, whereas in the rest of the world either stayed stable or the EU rose by 5 percent. So

this means if you are a steel buyer, it doesn't matter whether you consume imports or domestic supply, your prices go up and this means you are affected by the increased prices. Nicole Vogt is the Global Metals Co-lead at Boston Consulting Group. Nicole, thank you so much for being with us on What's News. Thank you for having me. And we're already hearing from some major U.S. trading partners on their response to these overnight tariffs. The EU says starting April 1st it'll place duties on around $28 billion in American products

including bourbon whiskey, boats and motorcycles but stressed it was open to negotiation. Australia, meanwhile, isn't retaliating with its prime minister saying that trade tensions are economic self-harm that'll be paid for by consumers. Instead, he's pursuing a tariff exemption, which Trump had said he was considering given that Australia trades at a deficit with the U.S. Coming up, Greenlanders reject moves toward a quick independence in the face of Trump's threats to take over the island, and Irish officials hope to charm their U.S. counterparts during tax and trade talks at the White House

later today. We've got those stories and more after the break. This episode is sponsored by Northern Trust Wealth Management. There is more to being a successful entrepreneur than just good business practices. What is it about an entrepreneur's childhood that helped fuel their entrepreneurial spirit? What are entrepreneurs doing to cultivate this spirit in their own children and build a legacy beyond their business? Tune in each month to the Road to Why podcast by the Northern Trust Institute, where host Eric Schapea dives deeper with leading entrepreneurs on these topics and more. Find the Road to Why where you listen to your favorite podcasts.

Well tariffs aside, a key economic data point could move markets today. The February Consumer Price Index, which will reveal whether Fed officials and the Trump administration have been able to turn the tide on inflation. Ahead of those figures, WSJ's Take on the Week co-host, Tellus Demos, asked Morgan Stanley's chief global economist, Seth Carpenter, where we are in the fight against price pressures and what that could mean for the Fed's rate trajectory. Remember, inflation is the change in prices. It's not the level of prices.

And this is a different, another place where I think egg-headed professional economists like me often talk past real people, right? Because we're talking about inflation. Inflation's coming down. Everything's getting a lot better. But prices are still rising. And so that's what people are noticing maybe. Exactly.

Not only are prices still rising, people still remember what the price of milk was from 2019. And we're well above that. And so I think there's a little bit of a disconnect. And it's probably largely the economist profession's fault that we're not clear. But the Fed is going to be thinking about inflation and asking, OK, with all the available information, does it look like the trend is down? I think they're going to read the data as saying yes to that.

And they'll probably lower their policy rate one more time this year, probably in June, maybe in May, not at the upcoming meeting in March. And to hear that full conversation, check out the latest episode of WSJ's Take on the Week, wherever you get your podcasts. Turning to Washington, House Republicans have narrowly passed a proposal to fund the government into the fall, setting up a fight to get the measure passed in the Senate ahead of a Friday deadline and avert a government shutdown.

Republicans said their funding plan would clear the way for the GOP to move ahead with President Trump's agenda of tax cuts, spending reductions, and border security, which they're hoping to pass into law later this year. They'll need Democratic support to advance this week's spending bill, but Democrats have painted the proposal as an effort by Republicans to hand more congressional power over federal spending to Trump and Elon Musk rather than continuing with bipartisan negotiations. And one of the things potentially on the line in the congressional budget is Medicaid. The program is mainly for low-income Americans, but deep cuts could

affect state budgets and healthcare more broadly, and we want to know what questions you have. Send a voice memo to wnpod at wsj.com or leave a voicemail with your name and location at 212-416-4328 and we just might use it on the show. The Education Department is cutting its workforce by roughly half ahead of President Trump's expected executive order aimed at dismantling the federal agency. As part of a reduction in force notice, the department said it will shed almost 2,000 jobs, including more than 1,300 federal workers, through cuts, buyouts, and resignations. Senior department officials said full teams whose operations are seen as redundant or

unnecessary are being cut and those employees will receive full pay and benefits for 90 days, followed by severance pay based on their years of service. The officials said the cuts would affect every part of the department, but that the changes wouldn't affect department functions, such as delivering federal student aid. Voters in Greenland have opted for a slower move toward independence from Denmark, backing a party that focuses on domestic issues and rejects a closer relationship with the U.S. Security correspondent Suna Rasmussen says the center-right Democrats claimed an upset victory in the country's parliamentary elections,

which were called early in the face of President Trump's threats to take control of the island. Internationally, this can be seen as a setback for President Trump, I think is fair to say. The winning party is center-right, sort of moderate political party, which favors independence, but a gradual approach to independence. What this means is that they want to strengthen Greenlandic economy and Greenlandic businesses before a secession from Denmark takes place. So if President Trump was hoping for an opening for further American influence, that has sort of been fairly closed off with this election. Last week, Trump told a joint session of Congress that he thought the US was going to bring Greenland

under its control one way or the other, with promises on social media to invest billions of dollars into the country's economy. And finally, Ireland's leaders will need all the luck they can get when they head to the White House today for annual St. Patrick's Day celebrations. The festive occasion usually involves green-colored fountains, shamrocks, and Guinness. But as the journal's Chelsea Delaney explains, this year's meeting comes as the Emerald Isles record $87 billion trade surplus with the U.S., only smaller than those of China, Mexico, and Vietnam, and driven by a surge in pharmaceutical exports, make it a likely tariff target.

It's very unique in the world of diplomacy to have this standing invite to come to the White House every single year. There's a huge Irish- American population in the United States. So it normally is a celebration. But this year, there has been so much hand wringing about the visit because of the backdrop of huge global trade tensions. Ireland had this huge economic explosion over the past several years. And that's been driven in large part by American companies who have set up these Irish operations to

Bring down their taxes and so this makes Ireland even more vulnerable to The threat of tariffs or if Trump does implement changes to the tax code that would really change the calculations for these American companies And that's it for what's news for this Wednesday morning today's show was produced by Daniel Bach and Kate Bulevent with supervising producer Sandra Kilhoff. And I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening. This episode is sponsored by Northern Trust Wealth Management.

There is more to being a successful entrepreneur than just good business practices. What is it about an entrepreneur's childhood that helped fuel their entrepreneurial spirit? What are entrepreneurs doing to cultivate this spirit in their own children and build a legacy beyond their business? Tune in each month to the Road to Why podcast by the Northern Trust Institute, where host Eric Schapea dives deeper with leading entrepreneurs on these topics and more. Find the Road to Why where you listen to your favorite podcasts.