Defenders of the 50% global tariffs on steel imposed last year have framed them as a bulwark—an essential line of defense for American industry against unfair foreign competition. It’s a compelling narrative: protect domestic steel, protect national security, and preserve good-paying jobs. But new data tell a different story—one that should alarm policymakers.
Consider what has happened over just the past year. Steel exports to the United States from Asian countries have surged. According to data from the Steel Import and Monitoring Analysis System of the U.S. Department of Commerce, India doubled its shipments. Indonesia nearly tripled. Malaysia quintupled. Turkey was up 27%; Taiwan, a major exporter, 8%.
China, the world’s dominant steel producer, continues to generate excess supply. Last month’s 99th session of the OECD Steel Committee confirmed that global overcapacity hit a record in 2025 and that China was responsible for more than half of it. “The latest data show that, in 2024, the median Chinese firm received 15 times more subsidies relative to its asset size than a median firm elsewhere.”
China’s direct exports to the United States are limited by tariffs of 100% or more, but Chinese steel doesn’t simply disappear. Instead, it flows into neighboring countries, which then export to the U.S.—often at prices low enough to blunt the intended effect of tariffs.
The OECD group’s investigation “reveals significant transhipment activity between China and some Southeast Asian countries of steel subject to trade measures taken by OECD countries. Exporters are increasingly resorting to a widening range of circumvention techniques.”
Meanwhile, America’s closest trading partners—Mexico and Canada—have seen their exports fall sharply, down 20% and 31%, respectively. In other words, the tariffs are not stopping the problem; they are rerouting it in precisely the wrong direction.
Step back and the trend becomes even clearer. In 2022, Asia accounted for 26% of U.S. steel imports, compared with Mexico’s 17%. Today, Asia’s share has climbed to 28%, while Mexico’s has dropped to just 11%. The gap has doubled. And Mexican steel has high U.S. context, using our scrap and natural gas.
This is not what the United States-Mexico-Canada Agreement (USMCA) was designed to achieve. That agreement was intended to knit together a highly integrated North American economy—one built on efficiency, proximity, and trust. Supply chains would be shorter, more reliable, and more resilient. In a volatile world, that kind of regional integration is not just good economics; it is good strategy.
Yet these universal Section 232 tariffs, which are supposed to have a national security purpose, are pushing the system in the opposite direction. Steel employment has barely budged, and 98,000 manufacturing jobs were lost during President Trump’s first full 12 months back in the White House.
There is also a deeper strategic issue at stake—one that goes beyond trade balances and market share.
The global security environment is becoming more uncertain. Conflicts abroad, including in the Middle East, are already reshaping supply and demand for critical materials like steel. In such an environment, the reliability of supply chains becomes paramount. Domestic production will increasingly be directed toward defense needs, leaving civilian industries more dependent on imports.
The question, then, is straightforward: Where should those imports come from?
From neighboring countries with integrated economies, aligned standards, and longstanding partnerships? Or from distant markets influenced—directly or indirectly—by geopolitical competitors?
That is not a theoretical concern. It is a practical one. Supply chains built on proximity and trust are inherently more resilient than those dependent on long-distance, price-driven transactions.
A March 4 analysis from the Brookings Institution by Josh Spoores underscores this point. Over the past three decades, North America has developed a highly integrated steel market, spanning production, processing, and distribution. This system has been a quiet success story—supporting construction, manufacturing, and millions of jobs across the continent.
But tariffs on Mexico and Canada have introduced friction into that system. They have made it harder, not easier, for the regional supply chain to function efficiently.
The Brookings report offers a sensible path forward: unwind tariffs on Canada and Mexico while maintaining targeted measures against truly distorted markets, mainly in Asia. Such an approach recognizes a basic reality—that not all imports are created equal. Steel from trusted partners is fundamentally different from steel produced under conditions of chronic overcapacity and state support.
In addition, the OECD’s Steel Committee reports that “measures to address the injury from unfair trade have intensified with China the primary target.” But so far, the measures are failing. Lifting tariffs on Canadian and Mexican steel and then instituting a tough rule that steel has to be “melted and poured” in North America to take advantage of zero duties would be a big help.
Concern that easing Norh American tariffs would expose U.S. producers to renewed pressure overlooks an important distinction between competition and distortion. The goal of policy should not be to eliminate competition altogether—that would be both impossible and counterproductive, harming manufacturers and consumers that use steel. Instead, the goal should be to ensure that competition is fair and that supply chains are secure.
Right now, Section 232 tariffs are failing on both counts. They are not effectively blocking the impact of global overproduction. And they are undermining the efficiency and resilience of North America’s own industrial base.
There is still time to correct course, as negotiators from North American nations are sitting down to discuss the extension of the USMCA. But there is no need to wait until those talks are done. The U.S. can help itself as well as the region by moving now to realign tariffs to support, rather than hinder, North American integration, strengthening both economic performance and national security.
