Metal Tariffs Raise Production Costs for Manufacturers

Manufacturers face rising input costs as steel and aluminum tariffs hike expenses by up to 13% for some operators.

Updated on Oct. 22, 2026 in Employment

Metal Tariffs Raise Production Costs for Manufacturers

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Since the United States implemented 50% tariffs on steel and aluminum imports in February 2025, domestic prices for these raw materials have surged. The trade policy has triggered significant cost pressures for downstream manufacturers, resulting in 60,000 lost jobs across the broader manufacturing sector.

Why it matters

Higher input costs for steel and aluminum are reshaping margins for manufacturers that rely on these materials. While domestic production saw limited gains, the broader manufacturing industry faces increased cost structures that jeopardize labor levels.

Since February 2025, U.S. steel prices rose 33.9% and aluminum prices climbed 58% following the implementation of 50% import tariffs. The broader manufacturing industry has experienced 60,000 job losses, despite a 7.6% increase in domestic steel production.

The details

Fabricated-metal product manufacturers are particularly sensitive, as steel and aluminum account for 31 cents of every dollar of output. Automakers face similar challenges, requiring 16 cents of these materials per dollar produced. While steel employment rose by 0.7% and aluminum production fell slightly by 0.1%, these marginal shifts in metal-specific industries have not offset the broader contraction in manufacturing employment.

February 2025: United States increased section 232 tariffs on metal imports.

Market Landscape

These tariffs follow the precedent set by Section 232 of the Trade Expansion Act of 1962, which authorizes trade restrictions to protect domestic industries deemed essential to national security. The current market shift marks a significant departure from the previous 25% tariff rate environment.

Manufacturers should account for a projected 13% increase in production costs for fabricated metal goods and a 6.5% rise for automotive components. Leaders must evaluate supply chain procurement strategies to mitigate the impact of current raw material price volatility.

The takeaway

Operators must monitor the persistent cost increases in raw metals to determine if price hikes can be passed through to end customers. It is essential to review current procurement contracts to identify exposure to these high-tariff materials before the next production cycle.