Will Trump's Steel & Aluminium Tariffs Hit Auto Supplies?

Will Trump's Steel & Aluminium Tariffs Hit Auto Supplies?

Source: Suppy Chain Digital

President Trump adds 407 new steel and aluminium items to 50% US tariffs, increasing supply chain challenges and costs for automakers and suppliers

US President Donald Trump's administration has imposed wider tariffs on imported steel and aluminium products, adding 407 new items to its existing 50% levy.

The expanded duties, announced in a Federal Register notice, target products made from steel and aluminium, applying extra costs on top of other country-specific tariffs already in place. They include paint, deodorants, household consumables and gym equipment.

The move carries direct consequences for automakers and suppliers, which now face higher input costs and more uncertainty around procurement and production schedules, especially where derivative products are involved.

Expanded tariffs impact supply chain costs

The new list of products added to the Harmonized Tariff Schedule of the United States includes hundreds of derivative goods. These are items manufactured from steel or aluminium but were previously outside the scope of the 50% tariffs.

According to the US Department of Commerce, the Bureau of Industry and Security will enforce tariffs on both steel and aluminium content, while non-metal content in these products remains subject to existing tariffs based on country of origin.

The expanded tariffs came into effect on Monday (18 August), adding pressure to industries dependent on these materials.

Automakers, in particular, are hit hard. From stamped components used in vehicle body structures to precision aluminium castings in engine manufacturing, these derivative goods are integral to production lines. Procurement delays or rises in costs would have a direct impact on manufacturing timelines and pricing structures.

The automotive sector is already under pressure from labour disputes and inflation-linked cost increases. Procurement and supply chain leaders now face a challenge to potentially rework sourcing strategies and deal with volatile metal prices.

Market impact

Aluminium prices in both Shanghai and London fell on Monday following the announcement.

On the Shanghai Futures Exchange, the most traded aluminium contract closed 0.68% lower at 20,600 yuan (US$2,869) per metric ton, according to ET Infra. Earlier in the session, it reached 20,550 yuan – its lowest level since 6 August.

Meanwhile, aluminium on the London Metal Exchange dipped 0.65% to US$2,590 a tonne on Monday morning.  

China’s increased production of aluminium is also having an impact on price. July output was up 0.6% year on year to 3.78 million tonnes, while the country's import of unwrought aluminium and products surged 38.2% compared with the same month last year, based on customs data.

The surge in supply, coupled with concerns over dampened US demand due to higher tariffs, creates something of a perfect storm. Aluminium represents a critical input for vehicle manufacturing, particularly in EV chassis and lightweight structural components, meaning these price movements really matter for automakers. 

Lower raw material prices may seem like a benefit, but they are offset by increased tariff costs and the administrative burden of reclassifying and sourcing compliant products.

Tariffs timeline

President Trump's original round of 25% tariffs on steel and aluminium imports, which took effect in March, had already prompted a restructuring of sourcing for automotive firms.

At the time, he defended the taxes as necessary for economic independence, stating: "Our nation requires steel and aluminium to be made in America, not in foreign lands."

Tariffs were later doubled to 50%, although some nations managed to negotiate trade deals with reduced rates. 

Many companies have since looked to rework supplier contracts or shift production closer to end markets.

Ford is among those attempting to position itself to withstand tariffs with a higher percentage of domestic production, aligning with Trump's push for US manufacturing. Earlier this month, the automotive giant announced a US$2bn investment to overhaul its traditional assembly plant in Louisville, Kentucky, building on a US$3bn commitment to its EV battery facility in Michigan.

CEO Jim Farley previously called the tariffs "devastating," voicing concern that tariffs could inadvertently hand substantial benefits to Asian automakers like Hyundai, Kia and Toyota.

Further tariffs to come

Tariff uncertainty doesn't end there.

Speaking to reporters aboard Air Force One as he headed to a meeting with Russian President Vladimir Putin in Alaska on Friday, Trump said he was planning additional announcements on steel and semiconductor tariffs.

"I'll be setting tariffs next week and the week after on steel and on, I would say, chips," he continued. 

"I'm going to have a rate that is going to be lower at the beginning – that gives them a chance to come in and build – and very high after a certain period of time."