Ulbrich Economic Update - Number 61 (June 2025)
Download the 15 page Economic Update for the full details of recent economic trends impacting the steel and commodities markets, as well as the associated industries across the globe. Continue for the Executive Summary.
Steel Industry Updates
U.S. STEEL TARIFFS ARE NOW AT 50%, with President Trump doubling Section 232 duties on steel and aluminum imports, excluding the UK. The move has drawn backlash from Canada and Mexico, both threatening retaliation. U.S. steel imports fell sharply in April but partially rebounded in May. Meanwhile, the Department of Energy has designated metallurgical coal as a critical material to support domestic steelmaking. Nippon Steel’s proposed acquisition of U.S. Steel remains under review, with the U.S. government potentially taking a “golden share” stake to secure strategic oversight.
Overseas
GLOBAL TRADE TENSIONS REMAIN HIGH, with tariff-driven disruptions affecting supply chains from Vietnam to India. Europe is bracing for Chinese steel dumping, while the EU phases out Russian imports and plans sweeping customs reforms. President Trump’s Middle East trip produced over $230B in arms and aviation deals. India’s economy continues expanding with branded hotel growth and aviation investment, though concerns linger over rare earth supply chains. In Asia, manufacturing activity is faltering amid tariff pressure, while the military imbalance in the Taiwan Strait continues to draw U.S. scrutiny.
The Americas
U.S. MANUFACTURING ACTIVITY CONTRACTED in May, with the ISM Manufacturing PMI falling to 48.5%, its lowest level since November 2024. Production, new orders, and employment all remained in contraction, despite modest month-over-month improvements. Supplier deliveries continued to slow, driven by tariff-related delays and strained logistics, while inventories fell as pull-forward activity tapered off. Prices remained elevated, with the Prices Index registering 69.4%, reflecting ongoing cost pressures across the value chain.
Consumer confidence rebounded sharply in May following a partial pause in tariffs, but purchasing behavior showed signs of caution, with retail sales inching up just 0.1% and core capital goods orders plunging 1.3%. The Leading Economic Index fell 1.0%—its steepest drop since early 2023—signaling further economic softening. Construction spending declined for the second straight month, weighed down by single-family housing. Meanwhile, inflation showed mixed signals, with the Consumer Price Index up 2.3% and the Producer Price Index rising 2.4% year-over-year, though core PCE inflation rose just 0.1% on the month.
Automotive Trends
TARIFF UNCERTAINTY IS WEIGHING ON NORTH AMERICAN AUTO OUTPUT, with 2025 production forecasts down 800,000 vehicles. Ford and Volvo have paused guidance and announced layoffs, and Cleveland-Cliffs has idled its Dearborn Works facility due to weakening demand. India, meanwhile, is drafting incentives to localize rare earth magnet production—critical for EV motors—in response to Chinese export restrictions that have disrupted auto supply chains globally. Nissan plans to cut 20,000 jobs and consolidate factories amid rising tariff and production costs.
Energy Sector News
U.S. SHALE SPENDING IS FALLING as low oil prices and rising input costs prompt producers to idle rigs and cut capex by $1.8B. Oil production is now expected to decline in 2026 for the first time in a decade outside of pandemic years. Meanwhile, Shell has greenlit the Aphrodite gas project in Trinidad to help offset LNG shortfalls. A $27B UK-Norway gas supply deal also signals Europe’s ongoing energy dependency.
Aerospace Developments
BOEING AND SPACEX REMAIN IN FOCUS, with Boeing stabilizing 737 MAX production after quality concerns and receiving a three-year FAA ODA extension. Starship’s Mars timeline remains ambitious, targeting late 2026. The FAA is addressing severe air traffic control staffing shortages—128 towers are below threshold—with a multibillion-dollar modernization plan now underway. Meanwhile, Etihad’s $14.5B order for GE- and Boeing-powered aircraft highlights continued export demand for U.S. aerospace.
Metals & Commodities
U.S. IMPORTS OF PHARMACEUTICALS HIT RECORD HIGHS in March as companies stockpiled ahead of anticipated tariffs. Meanwhile, cocoa supplies from West Africa are expected to rebound following years of shortages, offering relief to global markets. China’s AI data center emissions are now under scrutiny, with operational CO₂ output from major tech firms up 150% since 2020. Lastly, the U.S. remains the second-largest global carbon emitter, trailing only China, which now produces more electricity than the U.S., EU, and India combined.
Medical Insights
THE U.S. FDA HAS APPROVED MULTIPLE BREAKTHROUGHS this month, including Moderna’s new mRNA COVID-19 vaccine, the first at-home cervical cancer test by Teal Health, and Gilead’s Trodelvy-Keytruda breast cancer treatment combo. Amgen’s Imdelltra showed 40% improved survival in lung cancer patients, while CAR-T trials for glioblastoma also yielded promising results. Pharma firms are expanding U.S. manufacturing capacity in anticipation of potential tariffs, with March imports surging 160% year-over-year.
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