Last week, President Donald Trump announced tariffs on aluminum and steel which are two of the most important metals globally. Imposed a 25% tariff on imported steel and 10% tariff on imported aluminum.
Immediately, gasps rang out across the markets – due to the United States imports steel and aluminum from Canada more than any other country and China, the real target of Trump’s ire, only supplies 3% of US’s steel. So the exceptions to these tariffs will exceed the rules, essentially eliminating most of their effects.
A decade ago, US steel production peaked at more than 100 million tons, but now just over 80 million tons a year. Domestic aluminum production fell by two-thirds, with three-quarters of the smelters closed since the peak.
During that period, the output of foreign producers increased substantially, doubling since 2000. Global steel production is now at an all-time high of 1.6 billion tons a year. This has caused prices to fall in the United States, costing thousands of jobs and increasing imports from the United States. The United States now imports four times as much steel as they produce. But these low prices have led to a surge in production of cars, aircraft and pipelines, which create more jobs than lost in metal production.
After the tariff reform, many experts analyzed the impact of these tariffs on specific industries such as automobiles, but what about the energy industry? Electricity production relies heavily on steel, concrete, copper and aluminum, due to they can both producing electricity and deliver electricity to where it is needed.
By 2050, the United States will have about 5 trillion kilowatts of electricity a year.
If we get 50% of its electricity from wind energy, 30% from other renewable energy sources, such as solar energy, will need 1.6 million megawatts of wind turbines, close to a billion tons of steel, including transmission and connection. Wind farms would become the greatest single sink for steel in the world.
The global steel production, 1.6 billion tons a year at present, will not meet the demand in the future without a significant increase of its price. Wind turbines can grow during the next 35 years but not the only one. It is easy to expect that, two billion more cars, four billion more buildings, and a whole lot more stuff to be built with steel by mid-century. Tariffs make us more stressful with a cent per kWh adding to our energy bills. Fortunately, we can and have to do better in recycling steel than what we do now.