What is the impact of the implementation of US steel and aluminum tariffs on Japanese industry?

1. The "50% Tariff" Finally Implemented

At 12:00 AM Washington time on June 4, as the cranes of cargo ships docked at US coastal ports began to move, the new tax rate was applied. Since the 25% imposed by the "Section 232" tariffs in 2018, this marks the third increase, and this time it has doubled to 50%. The White House emphasizes that it is "essential from a national security perspective," but the international community is taken aback.

2. The Only Exception is "Ally" UK

The only exception this time is the UK, where the rate will remain at 25% until July 9. The reason is the provisional signing of the US-UK preliminary framework agreement in April, where the UK side secured a "reprieve" in exchange for reviewing the environmental surcharge on US-made aircraft. The European Commission protests that it constitutes "discriminatory treatment," and other EU member states have expressed strong dissatisfaction.

3. Canada and Mexico Hit Hard

The top three countries for US steel imports are Canada (approximately 6.55 million tons), Brazil, and Mexico, accounting for about 45% of total imports. The Canadian government states that the impact will "ripple from Windsor's auto manufacturing to mining towns" and has dispatched an emergency negotiation team. Mexico's Ministry of Economy calls it "illogical and unfair" and is considering arbitration procedures under the USMCA provisions, the successor to NAFTA.

4. EU's Immediate Reaction and "Two-Stage Retaliation" Scenario

In Brussels, an extraordinary council meeting was held on the morning of the implementation day, where Trade Commissioner Šefčovič stated that "retaliatory tariffs worth up to 21 billion euros are prepared." The first stage targets consumer goods like American whiskey and peanut butter, with a proposal to expand to aircraft and IT equipment in the second stage.

5. German New Chancellor Merz's Visit to the US and Negotiation Prospects

Chancellor Merz (CDU), who is visiting the US for the first time shortly after taking office, is scheduled to visit the White House on June 5, with more than half of the meeting agenda expected to focus on the steel issue. Although the EU is the main negotiator, about 14% of Germany's exports to the US consist of steel and automotive parts, and domestic corporate pressure is strong.

6. Direct Impact on Japanese Companies

Japan accounts for about 4% of US steel imports by volume, ranking around 10th, but many are "strategic products" like high-strength steel sheets for automobiles. Nippon Steel, JFE, and Kobe Steel, which have hot rolling mills in the southern US, commented that "the tariffs will directly hit the imported raw material coils." Material costs could rise by up to 15%, and automotive OEMs will first be forced to pass on the costs.

7. Ripple Effects on Automobiles, Home Appliances, and Construction

If steel prices rise by $100 per ton, the manufacturing cost of a mid-sized sedan will increase by about $180.The price of aluminum has already risen by 28% year-to-date on the LME futures, impacting beverage cans, home appliances, and solar panel mounts. Japanese electronics manufacturers assembling in North America are particularly cautious, fearing it may offset the benefits of favorable exchange rates.

8. Immediate Market Reactions

Immediately after the tariff took effect, the NY Dow dropped by 1.2% compared to the previous day, while major steel company US Steel rose by 3.8%. In contrast, automotive stocks fell across the board, with Toyota ADR down by 2.1%. The hot-rolled coil futures on the Chicago Mercantile Exchange surged by 7.5% in one trading day.

9. Japanese Hashtag #SteelTariff Spreads on SNS

On X (formerly Twitter), "#SteelTariff" trended within an hour of implementation. Pessimistic posts included comments like "Material costs are rising again. Will even home appliances see price hikes?" (@nikkei) and "With a strong dollar and tariffs, U.S.-oriented business is hell" (@Crypto_AI_chan_). Meanwhile, there were also supporters saying, "Finally, we can protect American workers from cheap Chinese products!"

10. The Trump Camp's Vision of an "Industrial Renaissance"

The White House press secretary explained at a briefing that "tariff revenues will be allocated to a domestic infrastructure fund to support new electric furnace installations and job training." In fact, Trump positioned the U.S. Steel acquisition proposal announced in April as the "core of national industrial policy," using tariffs as leverage to induce domestic investment.

11. WTO Rules and the "National Security" Exception

The U.S. once again relies on Article 21 of the GATT (security exceptions) as the basis, but there is a history of its application being significantly narrowly interpreted in a 2019 lawsuit. The EU criticizes it as "unrelated to security" and is considering filing a WTO panel complaint. Even if the U.S. loses, it maintains a stance of "not recognizing any countermeasures," raising concerns about the hollowing out of the multilateral system.

12. The Shadow Battleground Surrounding China

In reality, China has already significantly reduced its steel exports to the U.S., but it remains the epicenter of overproduction, accounting for more than half of global production. While the U.S. is gradually easing tariffs on China, it also aims to curb imports from allied countries to block "indirect inflows including Chinese capital."

13. The Japanese Government's Response and Economic Security

The Ministry of Foreign Affairs and the Ministry of Economy, Trade and Industry held director-general level talks on the evening of the 4th, confirming "strengthened cooperation, including WTO-consistent responses." The Kishida administration emphasizes U.S. relations and advocates "dialogue over hasty retaliation," while considering increasing subsidy rates for domestic electric furnace expansion under the Economic Security Promotion Act as part of "securing essential materials."

14. Mid-term Outlook for the Steel Market

The industry think tank World Steel predicts that due to the current tariffs, U.S. steel demand will decrease by 3.2% in the second half of 2025, while prices will rise by an average of 12%. The coexistence of reduced demand and higher prices will lead to "polarization," with sheet steel remaining strong and structural steel for construction softening.

15. Implications of New Tariffs on Japan's Green Transformation (GX)

For Japanese companies rapidly transitioning from blast furnaces to electric furnaces, investment in electric furnaces in the U.S. market serves as a proving ground for CO₂ reduction technologies. However, if tariff-related investment recovery is prolonged, there is a possibility of a reverse flow bringing equipment industries back to Japan.

16. Citizen's Perspective—"The Day Canned Beer Gets Expensive"

The U.S. Craft Brewers Association stated in a declaration that "the tariff costs will have to be almost entirely passed on to the final product price," estimating a price increase of $0.65 for a 12-can pack. On social media, there are real outcries like "Summer BBQs will cost more."

17. Future Scenarios: Dialogue or Retaliation

Trump has firmly stated, "This is the deal this time," leaving little room for renegotiation. However, as the presidential election approaches, there may be increasing pressure for relaxation from states with agricultural exports. The EU positions the July G7 Summit as the "last opportunity," while Japan faces the difficult task of maintaining the free trade system while keeping the China-Russia encirclement intact through "trilateral cooperation."

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SNS Reaction Pickup (Excerpt & Translation)

Time (Japan Time)	Account	Post Excerpt	Likes/Reposts	Remarks
4th 13:08	@nikkei	"50% Tariffs on Steel and Aluminum to Promote Domestic Production in the US"	430/187	Nikkei Electronic Edition News Flash
4th 12:54	@Crypto_AI_chan_	"Even at 160 Yen to the Dollar, Tariffs Cause Explosive Cost Increase"	210/98	Investment Influencer
4th 14:20	@akasaka_moon	"Aluminum is a ranker... Speechless"	12/3	Youth-Oriented News Account
4th 11:30	#Steel Tariff Tag	"It's Insane" and Others	—	Trending

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In Conclusion

The figure of 50% is more than just a tax rate; it is a litmus test for the "resilience of the global trade order."It is.Japanese companies are facing a situation where they must recalculate their investment plans for green materials and high-performance steel, not just due to direct impacts. Will the next move come from governments around the world or the market itself? The summer of 2025 is likely to be a memorable season in the history of trade.

This article is a reconstruction and expansion by the author based on publicly available information. Unless otherwise noted, the figures are based on 2024 results, and the exchange rate is estimated at 1 USD = 158 JPY.

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