Picture This: Raw materials and some fabricated products prices surge under 50% Section 232 tariff scenario

What we know

On June 9, President Donald Trump increased Section 232 tariffs on steel, aluminum and derivative products from 25% to 50%. We ran updated Commodity Price Watch forecasts for ferrous and nonferrous products through the quarterly forecast model to assess the potential price pass-through of higher tariffs to downstream goods.

We assume US tariffs on steel and aluminum products peak at 50% in the third quarter of 2025 but are gradually reduced as the US finalizes bilateral trade deals with core trading partners. The average tariff rate on steel and aluminum imports gradually declines from 50% in the third quarter of 2025 to 38% in the first quarter of 2026, stabilizing at 30% by the first quarter of 2027.

Why this matters

While the increase in tariffs will push US prices for upstream materials higher, we will not see a full pass-through of the additional 25% tariff to finished prices. Fabricated metal products will see the strongest pass-through to prices given the high steel content of these goods; however, the impact will be negligible for most machinery categories. Price outlooks outside of the US were mostly unchanged. 

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.