Steel consumption in the US: major upheavals

The decline in household solvency and the rise in prices for finished rolled products in 2025 had a negative impact on production volumes in the sectors that generate the main demand for steel. Passing on the additional costs to end consumers after the introduction and increase of import duties on steel proved to be very problematic for many customers of steel companies.

The impact of macroeconomics

The US economy is not experiencing the best of times. Real disposable household income growth in 2025 slowed significantly compared to the dynamics of the past five years. The unemployment rate reached 4.3% in August, the highest monthly figure since October 2021.

At the same time, US household debt rose by $197 billion quarter-on-quarter in the third quarter to a record $18.6 trillion. Of this, $13.07 trillion was mortgage debt, another $1.66 trillion was auto loans, student loans accounted for $1.65 trillion, and consumer loans accounted for $1.23 trillion.

At the same time, the level of loans overdue by 90 days or more was 33%. This is the most significant quarterly figure since 2014. Overall, 80% of debts are in arrears.

Banking conditions remain tight. According to the Mortgage Bankers Association, the average 30-year mortgage rate was 6.71% at the end of March. It is still above 6% today. Meanwhile, according to investment bank JPMorgan, a significant recovery in new home sales is only possible if rates fall to 5% or below.

As for auto loans, rates have actually increased by 32 basis points to 9.41% in October. Consulting firm Cox Automotive attributes this to a reduction in the number of special offers from automakers’ financial divisions.

Unsurprisingly, consumers are pessimistic about new spending, especially on housing and cars.

Current steel consumption

The second important factor determining the situation on the US market in 2025 was unprecedented protectionist measures. From March 12, steel imports into the US from all countries were subject to a 25% tariff, and on June 4, President Donald Trump raised it to 50% by executive order.

The 50% tariff barrier caused steel imports to plummet by 10.6% in January-August, to 13.9 million tons. At the same time, only 1.4 million tons were imported in August, and the share of foreign supplies in the steel consumption balance fell to 16%, a historic low. In previous years, the figure was 20-23%.

It can be assumed that by the end of 2025, monthly imports are unlikely to exceed 1.5 million tons, and the annual decline will be about 12%. Meanwhile, domestic steel production in January-October increased by only 3% to 75.47 million tons. This did not fully compensate for the decline in foreign supplies, indicating a significant reduction in steel consumption.

An analysis by industry shows that the long products segment was hit the hardest. Here, the main demand comes from the construction industry. Meanwhile, flat products, whose main consumer is the automotive industry, proved to be less vulnerable.

Market situation

The number of new housing permits issued in the US in January-April fell by 3.5%. The volume of new housing construction started fell by 1.6%. From February to September, the indicator was lower than in January, showing a steady downward trend.

The situation is similar in the industrial and civil construction sector. In the first quarter of 2025, 418,000 square meters of retail space was commissioned, the lowest figure in the last 10 years. The commissioning of industrial space amounted to 20.44 million square meters. This is the lowest figure since 2017, according to consulting company CBRE.

In contrast, the automotive industry saw positive dynamics. Sales of new cars in January-October increased to 13.5 million units. This is 3.8% more than in the same period in 2024. However, the decline was avoided thanks to a situational factor: the cancellation of a tax credit of up to $7,500 for the purchase of electric vehicles from September 30.

Upon learning of the upcoming cancellation of the preferential terms, many Americans rushed to take advantage of them. This became the market driver in the third quarter. Due to the effect of borrowing from future sales, S&P Global Mobility expects the US auto industry to reach 16.1 million units by the end of 2025. This is higher than last year’s figure of 15.83 million units. Cox Automotive has similar expectations – 16.1 million units.

The demand for pipe products deserves a separate mention. According to the October forecast by the US Department of Energy, production at the end of this year will amount to 13.53 million barrels per day (bpd). At the end of 2024, 13.21 million b/d was recorded, which is a positive trend. However, the number of active drilling rigs decreased from 482 at the beginning of January to 414 at the end of October.

Thus, demand for pipe products in the oil industry has declined significantly. This is explained by both the rise in the price of rolled steel due to import duties and the decline in world oil prices from $81/bbl in January to $63.9/bbl in early November.

Impact of steel tariffs on demand

The introduction of tariffs forced large consumers in the construction and automotive sectors to switch to purchasing locally produced steel, rejecting foreign offers. In turn, US steel companies, taking advantage of the lack of competition from importers, sharply increased their own prices.

According to Business Security Group estimates, the additional costs to consumers resulting from the introduction and increase of steel tariffs in the US will amount to $29 billion per year.

In particular, the cost of US-made passenger cars is increasing by $2,000 per unit due to the rise in the price of imported parts, according to Cox Automotive estimates. As a result, the average recommended retail price of a new car in August rose by 3.3% year-on-year to $51,099.

According to the U.S. Census Bureau, the price index for new single-family homes under construction rose 4.2% in January-April. For the same period in 2024, the figure was 2.2%. In other words, inflation in the construction industry nearly doubled in the first phase of import duties. According to UBS Group estimates, tariffs could increase the cost of building a single home by approximately $6,400.

This undoubtedly affects and will continue to affect household demand, both this year and next.

What’s next?

S&P Global Mobility predicts a decline in car sales in Q4 due to electric vehicles. Plus, ongoing problems with the availability of new cars. Americans will not stop driving, but with rising prices, many will extend the life of their old cars and trucks.

In the first half of 2026, American analysts expect further Fed rate cuts. Despite this, households’ financial reserves will continue to decline. S&P Global Mobility forecasts a decline in new passenger car sales in the US to 15.3 million units in 2026. This means that demand for sheet steel from automakers will decline.

This raises the question: what about the record $13 billion investment by leading US automaker Stellantis in expanding production? Or Hyundai Motor Group’s plans to increase production capacity in the US to 1.2 million vehicles per year? Won’t this lead to an increase in demand for automotive steel?

Of course it will. But not next year. It’s a longer story. For example, the launch of the Stellantis car plant in Belvidere, Illinois, which has been idle since 2023, is scheduled for 2027, and the new Hyundai car plant in Georgia will not be operational until 2028 at the earliest.

There are also no prerequisites for an increase in demand for strip steel from pipe manufacturers. The World Bank forecasts an average oil price of $60/bbl for 2026. This means stagnation in US oil production, which will amount to 13.51 million bpd, according to estimates by the Ministry of Energy.

The outlook for long products in 2026 is also not very optimistic. The American Institute of Architects (AIA) expects total construction spending to increase by 2.6% to $2.24 trillion by the end of this year. In 2026, the increase will be another 3%.

“The projected growth is unlikely to even offset the increase in material and labor costs. Therefore, it is assumed that the volume of construction will not increase in the next two years,” according to the AIA consensus forecast.

The AIA also notes a sharp decline in the number of projects started in the manufacturing sectors. This may be partially offset by the construction of data centers and infrastructure facilities, which are receiving government investment.

For example, the $4.9 billion federal “Invest in the Bridge” program announced in June this year involves the replacement and repair of approximately 42,000 existing road bridges. Of this amount, the Federal Highway Administration (FHWA) has allocated only $500 million in 2025. Most of the spending is planned for next year.

Other major federal government investments include $45 billion for the construction of detention centers for illegal immigrants and $47 billion for the construction of infrastructure on the border with Mexico, including a wall, roads, checkpoints, etc.

Based on this, the following conclusions can be drawn:

• Demand for finished steel in the US will remain weak next year in key consumption sectors – the automotive and oil industries, as well as construction.
• Government investment will partially offset the overall decline in construction.
• The negative effect of tariffs on imported steel will persist, combined with macroeconomic problems that are causing pessimism among households.