How Steel Tariffs Could Crush 5 Key U.S. Industries

It doesn’t take an economist to know what happens when the price of raw materials shoots up, the pressure trickles down. For American businesses that build homes, manufacture cars, or can everything from beans to beer, the Biden administration’s new steel and aluminum tariffs could feel like a sucker punch. Not because they didn’t see it coming, but because the timing couldn’t be worse.

The new wave of tariffs, largely aimed at Chinese imports, comes at a time when interest rates remain high, construction costs are already volatile, and manufacturing optimism is still wobbling from pandemic-era disruptions. This isn’t the first time steel and aluminum have become economic chess pieces. But the stakes feel different now. Many companies are leaner, more efficiency-obsessed, and deeply tied to global supply chains that don’t flex easily.

Let’s start with homebuilders. The average new house in the U.S. contains nearly a ton of steel, in everything from nails and rebar to appliances and HVAC systems. When steel prices climb, those costs are passed to developers. And when developers pass them on to buyers, affordability erodes even more. For first-time homebuyers already facing the twin dragons of high interest rates and low inventory, this is yet another wall. It’s not just about raw steel either. Aluminum windows, railings, doors, they all add up. Builders are already forecasting delays, cost increases, and thinner margins.

Car manufacturers, especially in Detroit, know this playbook all too well. The last major steel tariffs under Trump in 2018 forced automakers to rework sourcing contracts, absorb higher material costs, and raise vehicle prices. This time, they’re even more vulnerable. Electric vehicles rely heavily on aluminum for lighter frames and increased efficiency. Higher tariffs on Chinese aluminum could raise EV production costs at the exact moment when U.S. automakers are racing to compete with cheaper foreign alternatives. If prices go up, consumer adoption slows down. And if that happens, the entire EV transition timeline takes a hit.

Then come the overlooked giants of the economy, the can makers. The American beverage and food industry uses more than 100 billion aluminum cans a year. A single cent increase per can, when multiplied at scale, can lead to millions in added expenses. For small beverage brands trying to compete with conglomerates, this could be the difference between profitability and collapse. And while big brands may be able to hedge or re-source, smaller ones won’t have that luxury. Tariffs might be targeted at nations, but the fallout lands on entrepreneurs.

Now, let’s talk trickle-down economics, but the real kind. When steel and aluminum prices rise, they affect transportation, construction equipment, machinery manufacturing, defense contractors, and even the packaging industry. These sectors collectively employ millions. Increased costs mean tighter budgets, potential job cuts, and hesitations around expansion. For entrepreneurs running small manufacturing firms, fabricators, or contracting businesses, this is a storm they can’t sail through on brand power alone.

Supporters of the tariffs argue they’re necessary to protect American jobs and curb unfair trade practices. And that’s partially true. Chinese overproduction and underpricing have been distorting global metal markets for years. But protectionism isn’t free, especially not in an interconnected supply chain where a part built in Ohio might depend on aluminum from Malaysia, wiring from Mexico, and a casting mold sourced from China.

The policy may protect U.S. steel mills and aluminum producers, but it simultaneously puts downstream industries at risk. And those downstream businesses often hire far more workers than the mills themselves. According to past studies, for every one job saved in steel production, several others may be lost in steel-using industries. That’s not just a statistic, it’s a small-town welding shop shutting down, or a prefab housing startup losing its edge.

The other problem? Retaliation. When the U.S. slaps tariffs on other countries, they often respond in kind. American exporters could soon find themselves facing their own price hikes or restricted access in international markets. This could affect everything from machinery exports to food products. In a world where global trade is already stressed, escalation risks turning a surgical economic tool into a blunt weapon.

Still, not all companies are bracing for impact. Some are already adapting. Manufacturers with diversified supply chains are shifting to tariff-exempt countries. Construction firms are stockpiling materials ahead of price spikes. Others are exploring domestic recycling and scrap metal usage to reduce reliance on imports. But these are stopgaps, not long-term fixes.

The irony is that while these tariffs are meant to boost American self-reliance, they’re exposing just how fragile that goal is without robust domestic alternatives. The U.S. doesn’t produce enough aluminum to meet its own needs. Its steel industry is modern but limited. Tariffs without a parallel investment in domestic capacity and innovation could become a tax with no return.

For entrepreneurs, the lesson is clear: resilience now means anticipating not just what your customers want, but what your costs might become tomorrow. Whether it’s sourcing smarter, lobbying stronger, or pivoting business models faster, survival will belong to the flexible. In a tariff-heavy world, agility is no longer optional, it’s the business model.

Level Up Insight:

Steel and aluminum tariffs may be designed to protect American industry, but the real winners will be companies that can move fastest, not those that make the loudest noise. Entrepreneurs who rethink supply chains, stay lean, and innovate on cost resilience will lead the next chapter of U.S. business. It’s not just about surviving policy shifts, it’s about learning to thrive in the volatility they create.