American industry is using less steel.

THE NUMBERS: U.S. steel consumption, annual average* –

** U.S. Geological Survey, Mineral Commodity Summaries. Excludes 2018 as half-tariffed, half not; that year’s consumption was 101 million tons. An alternative count from the World Steel Association has a slightly smaller disparity: 91.4 million tons on average from 2019-2025, 99.4 million tons from 2000-2017.

WHAT THEY MEAN: 

In the world of “industrial strategy,” is “subsidizing abundance” or “manufacturing scarcity” the better approach? A case study of Trump administration steel policy, with the Biden-era semiconductor CHIPS program as the “abundance” alternative –

Background: In 2018, the first-term Trump administration imposed “national security” tariffs of 25% on most imported steel and 7.5% on most aluminum. (Before that, steel was, in theory, mostly duty-free, but in practice frequently subject to anti-dumping penalties. See below for detail.) In February 2025, the second-term version raised the aluminum rate to 25% and extended steel and aluminum tariffs alike to Canadian and Mexican metal in February 2025; then, four months later, it hiked the rate for both to 50% and added “semi-finished” copper products (but not raw/refined copper metal) as well.

What’s happened since? Three data points and a couple of tentative conclusions:

Prices have gone up: According to the Department of Commerce’s quarterly “Steel Executive Summary,” steel in the U.S. was already pricey two years ago. In January 2025 – just before the inauguration — American metal-buyers paid an average of $758 per ton for steel, as against a worldwide average of $456 per ton. (Country detail: the European average was $587/ton, and the Chinese $386/ton.) Since then, world steel prices have been mostly stable, while the U.S. price has risen impressively — hitting $950/ton by mid-summer 2025, then stabilizing for a while, then jumping again to $1,200 this summer, more than double the $490 worldwide average.

* Commerce Department Steel Executive Summary, April-June 2026

Aluminum trends are similar: American buyers now pay roughly $4,500 per ton, about $1,000 above the $3,500 worldwide average. Copper is more expensive too, but the exemption of “cathodes, bars, and ingots” means the price gap isn’t very high.

Output about the same: The U.S. Geological Survey’s annual “Mineral Commodity Summaries” says U.S.-based companies produced 82 million tons of steel last year. This is a bit above the 81.3 million-ton “tariff-era” annual average from 2019 to 2025, and a bit below the 84 million-ton “pre-tariff” average from 2010 to 2017.*

Steel use has dropped: Though output hasn’t changed much, Americans seem now to use less metal than they did a decade ago. The USGS says last year’s “apparent consumption” of steel – for buildings, cars, machinery, etc. – totaled 95 million tons. This was 5 million tons less than the 100 million tons used in 2021, and 9 million tons below the 104 million-ton average from 2000 to 2017. Or, if you use the World Steel Association’s figures instead of USGS’s, 8 million tons less than the 2000-2017 average.

What does this suggest? Basically, the Trump administration’s metals program has been one of “manufactured scarcity.” That is, it has, with some success, tried to make steel more expensive, with less diversity of supply, more market power for U.S.-based producers, and a smaller overall U.S. market. (Aluminum too; less so copper.) This strategy can make U.S.-based producers more profitable, but with predictable consequences:

(i) “Buyers pay”: The administration justifies these policies as a “national security” measure – that is, a nationwide priority for which the American public should be willing to pay a cost. The approach Biden administration’s semiconductor program five years ago — “CHIPS” — took a that approach, investing $54 billion in chip production and research through grants and tax breaks. Overall, this aimed to create more chipmaking without raising prices or cutting supply. The Trump administration’s program, by contrast, asks metals buyers alone – not the public as a whole – to pay for the ‘security’ through higher prices and fewer supply options. In practice, the “metals buyers” are U.S.-based automobile manufacturers, construction firms, federal government infrastructure projects, machinery-makers, and so on. As an example, a compact SUV contains about a ton of steel and 200 kilos of aluminum. The widened disparity between U.S. and world steel prices means a U.S.-made vehicle starts out about $500 in the hole as against a European car, and nearly $800 for a Chinese car. Aluminum disparities add about $400 more.

(ii) “Buyers respond”: Faced with this cost, the buyers have some choices: shrink a bit, shift costs onto the public by raising their own prices, or innovate so as to use less metal. Some of each may be going on. The GDP “share” of big metal-using industries — in Bureau of Economic Analysis jargon, construction, “fabricated metal products,” automotive industry, and “other transportation equipment” — has dropped, with the manufacturers’ share down from 3.1% in 2017 to 2.6% as of early 2026, and the construction firms’ from 4.4% to 4.3%. (“Primary metals” have been stable at 0.3%.) Costs have gone up a bit — inflation in construction appears to be about double the national average, and new car prices are up about $2,000. At the same time, American steel use has dropped about 10% from 2000-2017 levels.

Closing thought: The idea that primary metals production has “national security” value isn’t obviously wrong. As with semiconductors, metals are inputs for “downstream” industries of all kinds, and diverse and reliable supply is important. As to whether the U.S. metals companies genuinely need an expensive public “industrial strategy” program, opinions can vary. But either way, the administration’s program — “manufactured scarcity”, which aims to help local producers by raising prices and reducing competition — has the basic flaw of discouraging metal use and perhaps reducing productivity over the long term. If national security requires something expensive, the Biden administration’s more “abundance-based” approach to semiconductors — spend to promote production, but don’t raise prices or diminish competition — looks fairer and better.

* Excluding 2018 as “half tariffed, half not”; that year’s output was 86.6 million tons.

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.

Metals:

The U.S. Geological Survey’s annual “Mineral Commodity Surveys” have concise two-page summaries of output, imports, exports, consumption, and more for iron and steel. Spreadsheets carry the data back to 1900.

The Commerce Department’s Steel Executive Summary (April-June 2026) has imports, exports, production, prices, etc., for steel.

The World Steel Association’s country-by-country data on steel.

Costs:

Cox Automotive tracks new car prices.

From the Federal Reserve’s “FRED” series, an inflation-in-construction-materials graph.

And “GDP by Industry” data, including GDP shares, from the Bureau of Economic Analysis.

CHIPS perspectives:

Commerce Department 2022 program summary.

Military/security perspective from the Defense Advanced Research Projects Agency

The National Institute for Standards and Technology has grant updates.

State of Arizona view.

… and TSMC Arizona status.

And some steel-tariff context:

If U.S. metals tariffs are 50% now, what were they before? Kind of a murky question, actually.

Most permanent U.S. tariffs on metals are zero or 1%, though some are a bit higher. (See Harmonized Tariff Schedule Chapters 72 and 73 for steel, 74 for copper, and 76 for aluminum.) Aluminum and copper are pretty straightforward, with actual rates generally the ones published in the HTS. Steel products, though, also carry 333 anti-dumping and countervailing duty orders,
about 40% of the 846 such orders on all products combined. So in practice, pre-2017 steel from different countries got very different treatment and was subject to rapid changes. Obama-era cases, for example, cut off about 90% of Chinese steel imports in 2015.

All this means that (a) the pre-2017 tariff rates on steel are not easy to calculate, and (b) the Trump-era tariffs really fall mainly on European, Japanese, Indian, Korean, Brazilian, British, and more recently Canadian and Mexican steel. See DoC’s anti-dumping and countervailing duty dashboard, searchable by product, date, and country.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

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Chinese “foreign direct investment stock” in U.S. as of 2025: $19 billion.

THE NUMBERS: Chinese foreign direct investment stock worldwide* –

* UNCTAD World Investment Report

WHAT THEY MEAN: 

Unusual for a U.S.-China summit event: The Chinese President, set to arrive in D.C. next week, will apparently have a swarm of Chief Executive Officers tagging along behind. No delegation list as yet, but the execs reportedly make electric vehicles, manage financial firms and Internet companies, run aerospace factories, etc.. The Trump admin’s hope thus seems less for top-tier policy achievements than for a spreadsheet of purchase orders and investment promises. All a little startling after 2025’s U.S.-China tariff volleys, and the administration’s early hopes to “decouple” at least the U.S. and possibly other countries from Chinese manufacturing. A Chinese-angle status report 18 months after Mr. Trump’s later, and the reason Xi et al may feel pretty pleased with the outcome:

U.S. Imports of Chinese Goods Down, Sort Of: In the fall of 2018, the first-term Trump administration put tariffs of 25% and 7.5% on about half of most Chinese imports. These stayed on through the Biden administration, and the second-term Trump admin added others.

At the “headline” level, U.S. imports of Chinese goods have turned sharply down. A convenient Census summary says in 2018 Americans bought $539 billion worth of Chinese-made goods — about $45 billion a month — which was 23% of the U.S.’ worldwide $2.56 trillion total. By comparison so far in 2026, the monthly average is $22 billion, the Chinese share of all imports is a modest 7.5%, and China ranks only fourth as a U.S. import source behind Mexico, Canada, and Taiwan. Seems like a lot; but a close look last month by Peterson Institute scholars Mary Lovely and Christine Wan suggests this shift in the trade data rankings is more “storm on the surface” than “change in the deep currents.”

Lovely & Wan explain that Americans actually buy nearly as much “Chinese” material as before, but now more often embedded in goods assembled in developing countries than in final retail-shelf form. China exports the “components” its factories used to buy from Taiwan and Korea (specialized glass, circuit boards, lighting, speakers) to facilities abroad, mostly though not solely in Southeast Asia. These affiliates then put it all together and send the resulting phones, TVs, appliances, etc., on to American industrial and retail customers. Thus, the apparent drop in U.S. imports from China is really more “supply-chain reworking” than a basic change in trade patterns. Lovely & Wan estimate a drop from 17.7% of “value-added” of U.S. imports in 2017 to 15.4% as of 2024. Global data from the WTO, meanwhile, show China’s share of world exports trade noticeably up since 2018:

GOODS EXPORTS    2018                     2025
World total                  $17.74 trillion        $26.26 trillion
China                            $2.26 trillion          $3.77 trillion
Chinese share            12.7%                         14.4%
WTO

Foreign Investment & Outsourcing: Investment data adds some color to the trade statistics by data by showing a decade-long Chinese foreign direct investment and outsourcing binge. UNCTAD’s World Investment Report series, the standard source, finds China now behind only the U.S. and Japan as an overseas investment source, and puts Chinese FDI stock abroad — that is, the value of Chinese-owned plants, labs, sales offices, real estate holdings, etc., abroad — at $3.58 trillion in 2025. This is nearly double the $1.94 trillion UNCTAD reported in 2018.

One consequence is that fewer Chinese now go to work in factories — Geneva-based economist Richard Baldwin finds Chinese manufacturing employment down by 18 million, from a 12-million peak in 2013 to 134 million in 2022. But the “outsourcing” and falling factory job totals don’t mean Chinese output has peaked. To the contrary, the World Bank finds Chinese manufacturing “value-added” up in dollar terms from $3.87 trillion to $4.82 trillion since 2018, and its share of the world value-added total has risen modestly as well, from 27.1% to 27.4%. In effect, as the consumer-electronics and appliance assembly work of the 2000s has moved out of China, China’s own output has shifted toward capital-intensive industrial inputs, electric vehicles, robots, and medicines.

In the United States: The U.S. is a relatively small part of this; in fact, China’s U.S. stake shrank a bit last year from $32 billion to $19 billion. (Mainly divestment of financial and real estate holdings, with some contraction in manufacturing.) About half of the current stock is in manufacturing: the Commerce Department reports 360 Chinese firms employing about 113,000 Americans, with $19 billion worth of annual output. Refrigerator and washing-machine plants in Kentucky and South Carolina, the aluminum extruder in Indiana, the automated garment factory in Arkansas, the auto parts and glass production in Ohio, Georgia, and Michigan, all illustrate the pattern. Pres. Xi’s CEO entourage presumably is getting some encouragement to add more.

So: Nobody really “won” the 2025 trade war, but China — having prepared by rewiring supply chains, outsourcing assembly, and moving up the industrial ladder — at minimum doesn’t seem to have lost. President Xi et al. are presumably pretty pleased with that outcome, and probably see a few purchase orders and investment pledges as well worth it.

FURTHER READING

The WTO Agreement:

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative.

Analysis:

Mary Lovely and Christine Wan of the Peterson Institute for International Economics look beneath the trade-data surface to explain the “Limits of Decoupling.”

Richard Baldwin counts Chinese manufacturing workers, finds a lot fewer than before.

How does China’s industrial economy work? IMF economists Rotunna, Ruta, and Verma tabulate subsidies, using a relatively narrow definition — basically cash grants, setting aside low-interest loans and other subsidy forms — and conclude that:

(a) Chinese subsidies made up about 1.8% of value-added in goods production between 2013 and 2023, as against 1.3% for the U.S. and 0.6% for the European Union, and were at 2.5% by early 2020s; and

(b) China spends much more than the U.S. subsidizing emerging-industry fields, e.g. EVs, robotics, advanced semiconductors, and so on, while the U.S. and EU subsidy programs are relatively heavier in agriculture and mining.

… and see Gillian Tett in the Financial Times (subs. req.) for an admiring review of this paper.

Data:

UNCTAD’s World Investment Report has figures (see the Statistical Appendix) on FDI flows and stock for all countries. The report $174 billion in Chinese FDI outflows last year, about 8% of the world’s $1.86 trillion total and behind only the U.S.’ $262 billion and Japan’s $186 billion. Hong Kong adds another $95 billion.

The Commerce Department’s Bureau of Economic Analysis’ most recent “Activities of U.S. Affiliates of Foreign Multinational Enterprises” release (out last July, with data through 2024), for snapshots of Chinese and other international firms’ U.S. investments, output, employment, trade, etc.

The WTO’s “World Trade Statistics” dashboard has exports and imports of goods and services for the world and all countries through 2025, with industry detail through 2024.

The IMF’s World Economic Outlook tracks GDP growth and lots more for the world, China, the U.S., etc..

Case studies:

Appliance-maker Hai’er’s Kentucky-based GE Appliances subsidiary.

Nanshan USA’s Indiana aluminum extrusion facility.

The Wall Street Journal reports (subs. req.) on the roughly 60 Chinese auto-parts manufacturers in the United States.

And from the government, the Committee on Foreign Investment in the United States regulates FDI for security.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

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