August, 2025- The Budget Lab (TBL) at Yale University estimated the effects all of the U.S. tariffs and foreign retaliation implemented in 2025 through June 16, including the effects of the 50 percent steel and aluminum tariffs. TBL analyzed the June 16 tariff rates as if they remained in effect in perpetuity.
MINUSES: In its estimate, TBL found the 2025 tariffs imply an increase in consumer prices of 1.5 percent in the short run, assuming no policy reaction from the Federal Reserve. This is the equivalent of a short-run income loss of $2,000 per household, on average, in 2025 dollars. All 2025 U.S. tariffs plus foreign retaliation lower America’s real GDP growth by 0.6 percentage points over calendar year 2025.
Motor vehicle prices rise 13.6 percent in the short run and 11.9 percent in the long-run, the equivalent of an additional $6,500 and $5,700, respectively, to the price of an average 2024 new car.
PLUSES: Long-run output in the manufacturing sector expands by 1.6 percent under the tariffs, with durable goods manufacturing output 3.1 percent larger. Moreover, the expansion of the overall manufacturing sector more than crowds out the rest of the economy: construction contracts by 3.1 percent, agriculture by 1.1 percent, and mining and extraction by 1.0 percent, according to the TBL.
MINUSES, PART II: Canada has borne the brunt of the damage from U.S. tariffs so far, with its long-run economy 1.9 percent smaller in real terms (reflecting both U.S. tariffs and Canadian retaliation to date).
STEEL INDUSTRY RESPONSE
Kevin Dempsey, president and CEO of the American Iron and Steel Institute, on May 30 welcomed the announcement that the current administration was doubling existing steel tariffs from 25 to 50 percent. “Led by China, global steel overcapacity and production continues to grow even as overall global steel demand is being impacted by the sharp downturn in the Chinese construction sector. As a result, Chinese steel exports to the world have more than doubled since 2020, surging to 118 million metric tons in 2024, more than total North American steel production.
“Given these challenging international conditions that show no signs of improvement,” Dempsey continued, “this tariff action will help prevent new surges in imports that would injure American steel producers and their workers.”
The Steel Manufacturers Association issued a statement, too, saying that American-made steel is at the heart of the administration’s plan to “revitalize domestic manufacturing and return our country to an economic powerhouse. This action will strengthen a vital industry that has suffered from global overcapacity, largely driven by China.”
Since the tariffs were first announced in 2018, American steelmakers have invested over $20 billion toward growth and modernization. “Increasing the tariffs will promote greater investment and ensure that steel imports do not surge into the U.S. market.”
Peter R. Matt, president and CEO of Commercial Metals Co., told investors June 23 that despite concerns regarding tariffs and related economic uncertainty, “we experienced an encouraging degree of stability across each of our key internal leading indicators, including project bids, new awards and backlog volumes.
“Tariffs are just the latest flavor of uncertainty that the industry has had to manage through. On the supply side, we are benefiting from a reduced level of steel imports into the domestic market as a result of the elimination of previous Section 232 exemptions and, subsequent to the quarter end, an increase in the effective levy rate to 50 percent.
“While we do not know how long these policies will remain in effect,” Matt said, “they should support steel pricing for their duration.”
SUPPLY CHAIN IMPACTS
Members of the American Metals Supply Chain Institute (AMSCI) are raising urgent concerns over the recent decision to double tariffs on imported steel and aluminum, particularly from key trading partners and allies.
The “abrupt nature” of the increase left U.S. traders and suppliers facing millions in potential losses on shipments already in transit, according to a statement from the association. “This is worse than the 2018 tariffs,” according to one AMSCI member with more than 130,000 metric tons of steel en route to the U.S. “At least back then, we had several months to prepare. Now, businesses are caught mid-shipment, with no guidance, no recourse, and no time,” the member said June 4.
The tariffs—justified under Section 232 of the Trade Expansion Act on national security grounds—are facing growing scrutiny, both legally and politically, says AMSCI. “The changes, on again-off again implementation, and changing justifications create significant commercial and policy concerns.”
The association warned this latest tariff decision could destabilize the U.S. metals market, artificially inflate domestic steel and aluminum prices, and undermine international confidence in American trade policy. “We’re already seeing domestic mills issue price increases,” said another member. “The message this sends to our global partners is damaging: the U.S. market is high-risk and unpredictable.
‘WHIPLASH’
Members of the Institute for Supply Management, surveyed for the monthly manufacturing Report on Business, talked about the tariffs in the report issued June 1.
“Business activity is slower and smaller this month. Chaos does not bode well for anyone, especially when it impacts pricing,” a primary metals producer reported.
“Tariff uncertainty is impacting new international orders. Tariffs are also the main reason our Asia customers are requesting delayed shipments,” an ISM metals fabricator member reported.
“There is continued uncertainty regarding market reaction to the recently imposed tariffs and resulting actions by other countries,” said a machinery builder.
“The administration’s tariffs alone have created supply chain disruptions rivaling that of COVID-19,” said an ISM member in the electrical equipment and components industry.
“Tariff whiplash continues … the question is what happens in 90 days. We are doing extensive work to make contingency plans, which is hugely distracting from strategic work,” one manufacturer said in its survey response.
PRICES AND COMPETITION
CAMMU, the Coalition of American Metal Manufacturers and Users, in a June 13 statement, said that U.S. metal-using manufacturers are already paying significantly more for steel than their global competitors.
It cited SteelBenchmarker, which listed the price of hot-rolled steel coil in the United States at $993 per ton, compared to $384 in China and $715 in the European Union. “If this gap widens, customers will simply source finished products from abroad—putting our member companies and American jobs at risk,” CAMMU stated.
“The domestic steel industry has not been able to meet U.S. demand for years, and the situation is only getting worse. Closure announcements by Cleveland-Cliffs [of] facilities in Pennsylvania and Illinois highlight a shrinking—not expanding—production base, even under the protection of Section 232 tariffs,” the coalition said.
Critical inputs, often sourced from trusted allies such as Canada, Japan, South Korea, and Western Europe, “are essential to domestic manufacturing. With no exclusion process in place, U.S. manufacturers are forced to pay inflated, tariff-laden prices, making them less competitive globally.
“This uncertainty is already prompting customers to delay or cancel orders, threatening jobs, investment, and long-term planning,” CAMMU continued.
“Imposing steep tariffs on Canada, in particular, undermines the North American supply chain, disrupts the automotive industry, and damages a defense production-sharing agreement that has been in place since 1956.”
MITIGATION
Josh Beal, director of investor relations for heavy machinery manufacturer Deere & Co., spoke about tariffs during the company’s May 15 earnings call. “To provide context on Deere’s potential tariff exposure, we provided a geographic breakdown of U.S. complete good and component sourcing (see Figure 6, above). Nearly 80 percent of U.S. complete goods sales are from products built at our U.S. manufacturing facilities, with over 75 percent of the components used at those facilities sourced from U.S.-based suppliers.”
However, Deere projects a pre-tax tariff impact in fiscal 2025 of just over $500 million, should the levels continue throughout the remainder of the fiscal year.
Joshua Jepsen, senior vice president and chief financial officer, said Deere launched mitigation efforts to minimize the impact of tariffs on customers and dealers. For example, Deere teams have certified eligible products for USMCA and agriculture equipment-use-only exemptions for Mexico and Canada. “These certifications were not required historically as our products were generally duty-free. In only a few weeks, we were able to certify complete goods and components that make up the majority of the potential exposure from these countries.”
Deere also moved some component sourcing to “where we see no-regret solutions.” Jepsen says there isn’t “much opportunity for price mitigation to impact fiscal 2025 given that our order books for most product lines are nearly full for the rest of the year.”
