Trump’s Metal Tariffs Sent U.S. Steel Prices Up 34% and Aluminum 58% With Almost No Job Growth: New Canadian Study

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The promise behind higher U.S. metal tariffs was straightforward: make imported steel and aluminum more expensive, give American mills room to expand, and bring industrial jobs back with them. A new analysis from the Montreal Economic Institute suggests the price increase arrived far faster than the employment boom. Between February 2025 and June 2026, the study calculates that U.S. producer prices for steel mill products climbed 33.9%, while aluminum mill shapes jumped 58.0%. Employment in the industries being protected, meanwhile, grew by less than 1%. The numbers sharpen an old argument over tariffs: protecting a mill can help the company operating it, but every automaker, machinery producer, construction supplier and metal fabricator buying its output must then absorb the higher price. That trade-off is becoming increasingly difficult to overlook.

A Price Shock Arrived Faster Than the Industrial Revival

Donald Trump’s renewed Section 232 strategy moved quickly. In March 2025, a 25% tariff was applied broadly to imported steel and aluminum after previous country exemptions and alternative arrangements were removed. On June 4, the administration doubled the rate to 50% for most affected imports, arguing that stronger protection was required to support domestic production and address national-security concerns surrounding dependence on foreign metals. The Montreal Economic Institute’s new Economic Note, authored by University of Toronto economist Joseph Steinberg, finds that the price response was dramatic. Using U.S. producer-price data, it calculates a 33.9% increase in steel mill products and a 58.0% increase in aluminum mill shapes between February 2025 and June 2026.

Those percentages matter because they describe prices faced much closer to the factory gate than the prices shoppers see on a store shelf. A company making truck components, industrial shelving, farm machinery or ventilation equipment can encounter higher steel costs months before those increases become visible in the final product. The Canadian comparison in the study makes the divergence particularly striking: MEI calculates increases of roughly 1% for comparable Canadian steel products and 26% for aluminum over its comparison period. The institute explicitly cautions that the gap is not a formal causal estimate. Global commodity conditions, exchange rates and supply disruptions matter too. Still, a price difference exceeding 30 percentage points on both metals is large enough to make the tariff regime difficult to dismiss as a minor factor.

Steel Output Rose, but Hiring Barely Budged

If the tariffs were judged only by steel production, the picture would look more favourable. MEI reports that U.S. steel production increased 7.6% over the period it examined. That is a meaningful gain and is consistent with the basic logic of protection: when imported material becomes more expensive, domestic mills become more competitive and can sell additional output. Yet the employment response was dramatically smaller. Steel-sector employment increased just 0.7%, according to the study. Recent Bureau of Labor Statistics payroll figures tell a similar story of limited movement, with employment at iron and steel mills remaining around the mid-80,000 range through much of 2025 and 2026 rather than surging alongside metal prices.

Part of that disconnect reflects how modern heavy industry operates. Producing more steel does not necessarily require hiring workers in proportion to additional tonnage. Existing furnaces can raise utilization, previously idled capacity can restart, and highly automated facilities can expand output with relatively modest additions to payrolls. The quickest post-tariff response identified by MEI illustrates the point: Century Aluminum restarted idled capacity at its Mount Holly operation in South Carolina, adding roughly 50,000 metric tons of annual capacity. Restarting equipment already in place is considerably faster than constructing an entirely new mill. It can improve domestic supply, but it is unlikely to generate employment on the scale implied by political language about rebuilding an entire industrial workforce. Higher production, in other words, does not automatically translate into a comparable jobs boom.

Aluminum Shows an Even Sharper Mismatch

The contrast is more severe in aluminum. MEI finds that U.S. aluminum production actually slipped 0.1% while employment in aluminum and other nonferrous-metal production rose only 0.6%. At the same time, the producer-price index for aluminum mill shapes was 58% higher in June 2026 than it had been in February 2025. Bureau of Labor Statistics data confirm the underlying movement: the aluminum mill-shapes index rose from 249.608 in February 2025 to 394.359 in June 2026. Prices subsequently retreated from that June peak, which is an important distinction—the study’s 58% figure describes its measurement window rather than claiming aluminum remained exactly 58% higher in October.

Aluminum also highlights the limits of trying to rebuild industrial capacity through price protection alone. New primary smelters are enormous, expensive projects that cannot appear a few months after a tariff is imposed. A planned Oklahoma smelter involving Emirates Global Aluminium and Century Aluminum has been valued at around US$4 billion and designed for eventual capacity of roughly 750,000 metric tons a year. Earlier plans envisioned production toward the end of the decade, while the project has subsequently faced local political and permitting challenges. That time lag is central to the tariff debate. Import costs can change overnight when a proclamation takes effect; electricity supply, financing, environmental reviews, construction and commissioning for a smelter take years. During the gap, American metal users can end up paying protected-market prices before much new domestic supply exists.

Downstream Manufacturers Are Paying the Bigger Bill

The largest economic impact may therefore be felt outside the steel and aluminum industries themselves. MEI estimates that fabricated-metal manufacturers use approximately 31 cents worth of steel and aluminum inputs for every dollar of output, while motor-vehicle manufacturers use roughly 16 cents. Those ratios help explain why tariffs that look targeted at imported metal can spread throughout manufacturing. Steel becomes a cost embedded in machinery, vehicle frames, storage systems, construction products, appliances and thousands of components. Aluminum moves through vehicles, packaging, aerospace equipment, electrical systems and building products. A company does not need to import metal directly to feel the tariff; it can simply buy from a domestic supplier whose market price has risen alongside tariff-protected import prices.

MEI offers a deliberately simplified calculation to illustrate the potential scale rather than a forecast of what every company will experience. If manufacturers could not change their input requirements and the full metals-price shock passed through, it estimates production costs could rise about 6.5% for automakers and 13% for fabricated-metal producers. In practice, businesses have options: they can renegotiate contracts, redesign parts, use inventories, substitute materials, squeeze profit margins or pass some of the increase to customers. But none of those responses is free. A small metal fabricator may have less bargaining power than a global automaker, while a supplier locked into a fixed-price customer contract may initially absorb much of the increase itself. That is why tariff policy can create winners inside the protected industry while simultaneously placing pressure on a much larger group of companies that purchase its products.

The 2018 Tariff Round Already Showed the Trade-Off

The current findings do not arrive without precedent. The U.S. International Trade Commission examined the first Trump administration’s Section 232 steel and aluminum measures covering 2018 through 2021. Its retrospective analysis found that the tariffs did what protection is supposed to do in several respects: affected steel imports fell 24%, domestic steel prices rose 2.4%, and U.S. steel production increased 1.9%. Aluminum imports fell 31%, prices rose 1.6%, and domestic production increased 3.6%. The USITC estimated that protected U.S. steel production was about $1.3 billion higher in 2021 and aluminum production about $900 million higher because of the tariffs.

The same analysis found a cost elsewhere. Higher metal prices reduced production in downstream U.S. industries using steel and aluminum as inputs by an estimated $3.5 billion in 2021—more than the roughly $2.2 billion combined increase in steel and aluminum production. Federal Reserve researchers studying the broader 2018–2019 tariff episode reached a related conclusion on employment: manufacturing industries more exposed to tariff increases experienced relative employment reductions because benefits from import protection were outweighed by higher input costs and retaliation against U.S. exports. Neither result proves every tariff produces the same outcome under every economic condition. The USITC itself emphasized that its work was not a complete economy-wide cost-benefit assessment and did not value national-security objectives. It does show, however, why counting jobs or production inside the protected mills alone can provide an incomplete picture.

Tariff Supporters Can Point to Real Capacity Gains

The case for the tariffs is not that nothing costs more. The Trump administration has openly argued that higher prices and reduced foreign competition are acceptable if they restore strategically important domestic capacity. In April 2026, the White House said U.S. aluminum capacity utilization had risen from approximately 39% in 2017 to 50.4%, while steel utilization had increased from roughly 72.3% to 77.2%. The administration argued that the tariff system contributed to those gains and pointed toward an 80% utilization objective. That is a materially different test of success from asking whether employment jumped immediately: a national-security strategy may value idle capacity, domestic production capability and supply-chain resilience even when the number of workers added is modest.

Historical evidence also confirms that tariffs can boost protected output. The USITC’s analysis of the earlier Section 232 round attributed higher steel and aluminum production directly to those measures. The disagreement is therefore less about whether tariffs can protect producers than about the size and distribution of the price paid for that protection. A steelworker at a mill benefiting from greater utilization and a purchasing manager at a factory facing much more expensive sheet steel can experience the same policy in opposite ways. The current MEI study argues that the second group has so far borne a disproportionately large burden because metal prices rose far more dramatically than employment. Tariff supporters, by contrast, can argue that rebuilding strategic industries is a multi-year process and that judging investment decisions after roughly a year and a half understates the eventual response.

The Job Numbers Need a Careful Reading

MEI’s employment findings are arguably the most politically significant part of the analysis because job creation has been central to the case for industrial tariffs. An increase of just 0.7% in steel employment and 0.6% in aluminum and other nonferrous metals is difficult to describe as a labour-market transformation, particularly beside price increases of 33.9% and 58%. Bureau of Labor Statistics data reinforce the broad picture. Iron and steel mill payrolls remained almost unchanged over recent observations, while employment in alumina, aluminum and other nonferrous-metal production increased only modestly. The industries may be operating differently, but they have not suddenly become mass sources of new industrial employment.

The report also notes that total U.S. manufacturing employment declined by about 60,000 jobs between February 2025 and July 2026 while the metals tariffs were in force. That number needs an important warning label: MEI explicitly says its estimated relationship between the tariffs and that broader employment decline is small and not statistically significant. It therefore would be misleading to claim the tariffs caused those 60,000 lost jobs. Manufacturing employment is influenced by interest rates, exchange rates, demand, automation, investment cycles, energy costs and many other trade measures. The more defensible conclusion is narrower. Despite exceptionally large increases in the prices of protected metals, there is not yet evidence of a comparably large employment dividend inside steel and aluminum. The central promise of dramatically more jobs remains much harder to see in the data than the increase in prices.

Canada Provides a Useful, but Imperfect, Counterpoint

Canada makes an unusually useful comparison because its steel and aluminum industries operate beside the same enormous U.S. market while being exposed to many of the same global commodity forces. MEI estimates that Canadian prices for the comparable categories rose far less during its benchmark period—about 1% for steel and 26% for aluminum, compared with 33.9% and 58% in the United States. The institute treats the gap as evidence consistent with a substantial tariff effect, but stops short of calling it an econometric proof. That restraint matters. Canadian and American producers have different energy costs, product mixes, exchange-rate exposures and supply chains, and aluminum in particular has faced additional international disruptions.

Canadian government research on the previous tariff round nevertheless supports one critical mechanism behind the new study. Statistics Canada examined Canadian exporters hit by the 2018–2019 U.S. steel and aluminum duties and found that the value and volume of tariffed exports fell by about half relative to comparable untariffed products. Canadian suppliers generally did not cut their pre-duty prices enough to absorb the tariff. Instead, Statistics Canada estimated that U.S. importers paid essentially the full tariff through higher duty-inclusive prices. That history complicates the popular idea that a tariff is mainly a bill handed to the foreign producer. Foreign suppliers can lose sales, and some may eventually redirect production elsewhere, but businesses importing the goods—and ultimately firms or consumers further down the supply chain—can still shoulder much of the immediate cost.

Building More Metal Capacity Is a Much Slower Job Than Raising a Tariff

The strongest argument in MEI’s note is ultimately about timing. A government can change a tariff rate with a signed proclamation and make it effective the next morning. Building a steel mill or aluminum smelter means securing billions of dollars in financing, finding suitable land, arranging enormous supplies of energy, navigating permits, ordering specialized equipment, constructing the facility and then commissioning it. The tariff-induced price signal arrives almost instantly; the supply response does not. That helps explain how the United States can simultaneously experience sharply higher metal prices, some improvement in utilization and production, and almost no immediate employment boom.

MEI’s prescription is to focus more heavily on lowering regulatory and permitting barriers that delay investment rather than relying primarily on ever-higher import duties. Policymakers who place greater weight on national security may reach a different conclusion and decide that tariffs are worth the downstream cost. What the new numbers make harder to do is pretend there is no cost to allocate. Through June 2026, the most visible changes identified by the Canadian study were a 33.9% increase in U.S. steel-mill prices and a 58% increase in aluminum-mill-shape prices. The corresponding employment gains in the protected sectors were less than 1%. Future factories could improve that equation, but for manufacturers buying metal today, the price shock has already arrived. The promised industrial revival is taking considerably longer.

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