In early summer 2025, the US federal government doubled Section 232 tariffs on steel and aluminum imports from 25% to 50%, with the duty increase taking effect on June 4. This decision proved controversial and drew concern from many experts in the industry, as worries grew about the effects of higher tariffs on stainless steel prices and supply chains in general.
The cited concerns included shortages of specialty metals, drastic lead time increases, price volatility, and higher consumer prices.
This situation left many wondering what these tariffs will mean for stainless steel supply and pricing in the coming months. Keep reading to learn more about how the 232 tariffs are playing out in the stainless steel supply chain.
How Tariffs Affect the Domestic Stainless Supply Chain
While the goal of increasing the 232 tariffs was to protect the domestic stainless steel industry, they also create several challenges for the domestic stainless steel supply. This is because imported stainless steel accounts for upwards of 30% of the US stainless steel market, as domestic production is often insufficient to meet market demand. As it relates to hexagon, flat bar, and square bar, nearly 100% is imported. Domestic distributors have been significantly affected by tariffs that make their products expensive to buy, and very challenging for them to sell. Domestic manufacturers are not picking up the slack in supply.
The tariff increases have already resulted in some suppliers canceling stainless steel import orders, which then limits supply as domestic manufacturers are unable to keep up with demand. What’s more it takes time for domestic production to ramp up enough to make up the difference. This could lead to supply struggles in the near future.
The Link Between 232 Tariffs and Alloy Pricing
Supply limitations could also have a significant impact on the 304 and 316 stainless price and the cost of other stainless grades for end consumers because as imported stainless steel prices rise, suppliers generally pass tariff costs on to manufacturers and other buyers of raw materials. As less steel is imported, demand for domestic steel will rise, further increasing its price. Furthermore, with reduced competition from imported steel, domestic stainless steel prices could go up as well. All of these factors point to higher prices throughout the supply chain and manufacturing process, with the final result of higher prices for consumers and end-users of products made with stainless steel. Where a high percentage of supply in certain products is mainly imported, there will likely be shortages.
304 and 316 Stainless Steel- Cost and Sourcing Challenges
The supply chain and cost implications of the 232 steel tariffs depend greatly on the type of stainless steel required. Some favored grades of stainless steel, like 304/316 stainless steel, had an oversupply ahead of the tariffs, meaning that most buyers will not face shortage risks or extreme price volatility for this grade in the immediate future.
One way domestic producers may try to meet growing demand for stainless steel is to prioritize favored grades like 304 and 316.
The downside to this approach is that if domestic production focuses on certain, more common stainless steel grades, the supply of other less common grades could dwindle, leading to sourcing challenges and significant price volatility.
Regional Supply Constraints and Lead Time Impacts
The extent to which the stainless steel supply chain will be impacted by 232 tariffs will ultimately depend on where suppliers and buys are located geographically. This is because tariffs can shift the flow of goods to specific regions as the supply chain reacts to changing global trade dynamics. Shortages and price volatility in specific regions could result in significant lead times for some buyers but not as much for others.
Other Factors Influencing Pricing
Although most experts agree that pricing is affected by all these factors, many have warned about the practice of price gouging. Some of the larger distributors with inventory have been able to leverage the tariffs for higher profits using these methods.
How AAA Metals Mitigates Tariff Volatility
Given the supply chain challenges that the increase in 232 tariffs could cause, it’s essential to partner with a reliable stainless steel supplier. AAA Metals has been a trusted distributor of consistently high-quality stainless steel, superior nickel alloy, titanium and hard to find metals since 1978. Our team has the experience to source high-quality metals during these uncertain times. With a vetted industry network and partnerships, we help buyers mitigate the Section 232 impact with stable sourcing amid these tariff shifts.
AAA Metals has been able to mitigate some of the high costs incurred through tariffs by employing highly efficient processing techniques.
Please request a quote for more information about our stainless steel stock products and material options.