A Sudden Shift! The U.S. Slaps 50% Tariffs on Steel and Aluminum—Goods in Transit Caught in Limbo, Exporters Facing Their “Toughest Moment”

Summary

On August 19 (local time), the U.S. Department of Commerce abruptly announced that as many as 407 new categories of steel and aluminum products would be added to the tariff list, subject to a duty rate of 50%. This unexpected move shocked global markets, especially U.S. importers who had already paid for shipments currently in transit. They now face difficult choices as global trade stability is once again disrupted.

1. Policy Breakdown

    •  Effective Date: 12:01 a.m. EST, August 18

    •  Policy Content: The U.S. Department of Commerce officially announced in the Federal Register that 407 categories of steel- and aluminum-containing products would fall under Section 232, with a unified tariff rate of 50%.

Key Points:

    1.No grace period – Announced late Friday, effective Monday, and applies even to goods already in transit. U.S. importers were caught off guard.

    2.Stacking risks – This 50% tariff under Section 232 for steel and aluminum can be combined with other tariffs, such as “reciprocal tariffs” and the “fentanyl surcharge.”

The U.S. logistics industry has expressed strong dissatisfaction on social media. Industry insiders criticized the move, arguing that it wasn’t about correcting trade imbalances but about making imports prohibitively difficult.

Customs brokers and importers said they had received virtually no prior notice, and the fact that the measure took effect on Monday without exemptions for goods already shipped left many freight forwarders, shippers, and intermediaries stunned by the speed and scope of the change.

Table 1: Scope of Impact

2. Reactions from China and the EU

In today’s globalized world, any unilateral tariff action inevitably triggers chain reactions.

China:
Although Beijing has not issued an official response to the August 19 action, China has consistently opposed U.S. unilateralism and trade protectionism.

Many Chinese steel companies noted that direct exports of steel to the U.S. are limited, so the immediate direct impact is relatively small.

For example, XCMG stated that its U.S. business accounts for less than 1% of its total operations—nearly negligible. However, industry experts worry that the move could affect indirect exports of steel-containing products via third countries.

The EU:
Although the U.S. and EU previously reached a tariff agreement, a joint statement confirming its details has yet to be released. Reports indicate disagreements remain over “non-tariff barriers,” and the U.S. has not reduced its steep tariffs on EU automobiles as scheduled.

The EU has repeatedly expressed regret over the U.S.’s rising trade barriers this year and has prepared countermeasures to defend its economic interests.

European Central Bank President Christine Lagarde recently noted that the effective average tariff under the latest U.S.-EU trade deal is higher than the ECB had anticipated, casting further uncertainty on future trade prospects.

3. Market Impact and Disruption

This move has had a swift and broad impact on U.S. businesses, from costs and supply chains to overall competitiveness.

Brian Baldwin, Vice President of U.S. Customs at a major logistics firm, posted on social media:

“Basically, if it’s shiny, metallic, or has anything remotely to do with steel or aluminum, it’s probably on the list. This isn’t just another tariff—it’s a strategic shift in how steel and aluminum derivatives are regulated.”

For manufacturers that rely on imported steel and aluminum as raw materials, or import derivative products containing these metals, the 50% tariff means a massive spike in costs.

From automobiles and appliances to heavy machinery, nearly every manufacturing sector will face higher input costs. Steel is also a critical material in construction, and higher tariffs will drive up building costs, putting pressure on developers and contractors, and potentially impacting housing prices.

Even everyday consumer goods are affected. Packaging costs for canned beverages like beer and soda will rise, as the canning industry depends heavily on aluminum and a specialized tin-mill steel—nearly 80% of which is imported.

4. Small Businesses Hit Hardest

The new tariffs have thrown importers and logistics companies into chaos.

Compared with large multinationals, small businesses are especially vulnerable. Their pain is shared by small business owners worldwide.

Faced with surging costs, business owners must choose between passing costs on to consumers or absorbing them themselves.

Many small businesses already operate on thin margins, and sudden tariff costs could threaten their survival.

The Executive Director of the Illinois Craft Brewers Guild noted that for small breweries with razor-thin profit margins, the added burden of tariffs is enormous.

Small businesses often lack the resources to restructure supply chains or relocate production abroad.

Owners are being forced to urgently reevaluate their supply chains—whether to continue importing at high tariffs or switch to domestic suppliers. But domestic supply capacity is limited and prices are generally higher, making switching far from easy.

Tesla has even stated that the special steel required for its EV drive units cannot be sourced in sufficient quantities domestically.

5. Companies Respond with Emergency Measures

Some domestic companies reacted quickly and have already taken steps.

    •  A Shenzhen freight forwarder notified clients over the weekend that containers “already shipped but not yet arrived” could be rerouted to Vietnam or Mexico for re-declaration; otherwise, they would be subject to the 50% tariff upon arrival after August 18.

    •  A Ningbo appliance factory suspended production of 20,000 dishwashers originally scheduled for shipment next month, redirecting them to Southeast Asian channels. The factory is evaluating switching from metal casings to plastic to reduce steel and aluminum content.

    •  The Guangdong Aluminum Profiles Association held an emergency meeting this week to explore using HS classification techniques for products with aluminum content under 10%, in hopes of excluding some construction profiles from the list.

How the global supply chain will adapt to this shift, and how different countries will strategize in response, remains to be seen. We will continue to monitor developments closely