Farewell to an Idea

The impact of steel tariffs on the gear industry

“Farewell to an idea,” wrote Wallace Stevens in the poem The Auroras of Autumn (1947), exploring themes of change, impermanence, and the tension between imagination and reality. The phrase reflects Stevens’ meditation on the fading of belief systems and the transience of human constructs. It’s part of the broader contemplation in The Auroras of Autumn on the cyclical nature of life and the inevitability of endings.

Trade policy faces the end of stable, predictable global commerce—competing ideas are in a tug of war, and the tension between imagined futures and local reality is taut. Section 232 of the Trade Expansion Act of 1962 empowers the U.S. president to impose tariffs on imports deemed a national security threat. In 2018, it was used to justify tariffs on steel and aluminum, disrupting supply chains and prompting retaliatory measures from trading partners. At the time, manufacturers were allowed to apply for tariff exemptions through the Section 232 exclusion process if the materials were unavailable domestically or did not meet performance standards.

On March 11, 2025, the U.S. Department of Commerce announced it would terminate the Section 232 exclusion process, effective March 12, 2025. This limits manufacturers’ ability to seek relief from higher material costs, particularly for specialized alloys used in gear manufacturing. Without the ability to apply for exclusions, manufacturers who rely on these materials now face even steeper price increases.

As of March 12, 2025, U.S. Customs and Border Protection (CBP) began enforcing Section 232 tariffs on foreign steel and aluminum, reigniting trade tensions with key global competitors and close allies. This action, part of broader measures to protect and revitalize the U.S. domestic steel and aluminum industries, places a 25 percent tariff on imports of these materials.

While domestic steel producers have welcomed the move, hoping it strengthens national production, its downstream effects on automotive, aerospace, and industrial manufacturing—including the gear manufacturing sector—threaten to erode market position and exacerbate supply chain challenges that many industries are already grappling with.

The Ripple Effect on Gear Manufacturing

Gear manufacturers rely on high-chromium and high-nickel steels that are crucial for producing high-performance gears in demanding applications such as aerospace, defense, and heavy machinery. However, many of these materials are not made in sufficient quantities or with the required quality within the United States.

In the aerospace industry, for example, gears used in jet engines, turbines, and landing gear systems are often made from Inconel, Hastelloy, and maraging steels—materials known for their strength, oxidation resistance, and ability to withstand extreme temperatures and stresses. In marine applications, offshore drilling rigs, naval vessels, and submarine gears require materials resistant to saltwater corrosion and high pressures, such as 316 stainless steel and Ni-Cr alloys. Similarly, in the oil and gas industry, high-nickel steels like Hastelloy C276 and Inconel are indispensable in drill rigs and pumps subjected to harsh chemicals and high heat.

The tariffs will have a domino effect on production timelines and manufacturers may be forced to absorb the higher costs, pass them onto customers, or face reduced sales share in domestic and international markets. This is especially concerning for manufacturers relying on specialized materials to meet stringent performance standards across automotive, power generation, and chemical processing industries.

No Section 232 Exclusions

Under previous tariff cycles, manufacturers could apply for exclusions through the Section 232 process if domestic suppliers could not meet specific material needs. With the removal of the Section 232 exclusion process, manufacturers can no longer apply for new product exclusions, and pending applications will not be reviewed. Existing general approved exclusions (GAEs) have also been revoked. This shift removes a key avenue for relief, leaving gear manufacturers with limited options.

Exploring Alternative Strategies

Without the exclusion process, gear manufacturers must find ways to offset the economic impact:

• Reclassification: Some manufacturers may seek to reclassify materials under a lower tariff category, though this requires coordination with customs specialists.
• Foreign Trade Zones (FTZ): Operating within an FTZ may allow manufacturers to defer, reduce, or eliminate certain duties on imported steel. However, the administrative burden of managing an FTZ—complying with U.S. Customs and Border Protection (CBP) regulations, tracking inventory, and ensuring proper record-keeping—can be a barrier, especially for smaller manufacturers. While FTZs were previously used as a strategic workaround, it remains unclear whether their benefits will be as effective following the removal of Section 232 exclusions.

The Political and Economic Outlook

The broader economic and political consequences of the 2025 tariffs remain uncertain. While similar tariffs imposed in 2018 saw an uptick in domestic steel production, U.S. manufacturers also faced diminished profits and commercial edge in international markets. In the short term, the tariffs are contributing to inflationary pressures and uncertainty, adding complexity to the already strained global supply chains.

“While American businesses are incredibly resilient, we need time and adequate warning to implement such significant adjustments,” said John Cross, CEO of ASI Drives. “The rapid succession of changes is difficult to manage, placing a disproportionate burden on small manufacturers. This forces us to spend valuable time on nonrevenue-generating tasks instead of focusing on growing our business.”

Retaliatory tariffs from the European Union and Canada may deepen these disruptions, compounding the difficulties for manufacturers who rely on global trade for cost-effective materials. At the same time, the market for steel and aluminum remains volatile, with rising prices reflecting the ongoing uncertainty about the impact of these tariffs.

Protecting Presence in a Shifting Market

While the 2025 tariffs may provide a boost to domestic steel production in the short term, they pose a challenge for U.S. gear manufacturers. Manufacturers must act swiftly to secure revised sourcing strategies, reclassify materials, or establish operations within FTZs.

Furthermore, industry associations such as the American Gear Manufacturers Association (AGMA) and the American Bearing Manufacturers Association (ABMA) will play a key role in advocating for relief and pushing for policy adjustments that protect manufacturers’ long-term competitiveness.

“ABMA and AGMA know that the current environment poses new challenges and opportunities to the industry, and we want to hear from our members on how they are affected by tariff and regulatory changes,” said Jenny Blackford, president of ABMA and chief operating officer of AGMA. “In May, we look forward to bringing the story of our industry—its impact on the economy, national security, and the workforce—to the leaders in Washington so that they can be better informed on what our industry needs to continue to grow in the United States.”

Join AGMA/ABMA in Washington, D.C. to Shape Steel Trade Policy

On May 12–13, 2025, industry leaders from the gear and bearing sectors will gather in Washington, D.C., for the ABMA/AGMA DC Fly-In—a two-day event focused on engaging directly with federal agencies and lawmakers. This is a key opportunity for manufacturers to have a seat at the table and help shape the policies that impact the power transmission manufacturing sector.

Sessions will run from 8:00 a.m.–5:00 p.m. each day, with meetings and discussions involving representatives from the U.S. Trade Representative, U.S. Customs and Border Protection, Homeland Security Investigations, the Department of Commerce, and the National Security Council. Capitol Hill meetings will allow attendees to engage with senators and congressional representatives, helping lawmakers understand the strategic importance of domestic manufacturing and the challenges posed by tariffs and rising material costs.

Register through the American Bearing Manufacturers Association (ABMA).

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