Trump's tariffs expose Ukraine's steel industry to another war

[February 18, 2025]  By SAMYA KULLAB

ZAPORIZHZHIA, Ukraine (AP) — The steel mill in a partially occupied region of Ukraine is a dystopian maze of flames, chutes and tentacled pipes, vast enough to be a small city. Thunderous blazes of sparks flash above the open furnaces where workers smelt iron ore into streams of molten metal day and night.

The Zaporizhstal Iron and Steelworks, one of Ukraine’s largest steel plants, lies in the country’s industrial east, where Russia's 3-year invasion of its neighbor threatens to throttle production at any moment. Daily battles unfold along a front line 40 kilometers (25 miles) away as the plant churns out materials for military equipment and for foreign manufacturers to use in cars, appliances, and construction.

“Morale is not as high as it was before. We are pretty tired here,” plant supervisor Serhii Zhyvotchenko said, reflecting on the hardships. “But there is no way to go back; the only way is forward.”

Last week, though, a second war came to the doorstep of the hulking factory complex: the possible trade war that U.S. President Donald Trump has provoked since returning to office four weeks ago. Trump imposed tariffs of at least 25% on all imported steel and aluminum, a decision that could hurt an essential sector of Ukraine's battered economy.

Ukrainian government officials and business leaders were shocked by Trump’s Feb. 10 executive order, which underscored Ukraine's growing precarity in relation to its most important Western ally. The president maintains that imposing a variety of tariffs will level the playing field in international trade and make U.S. factories more competitive.

The steel industry’s share of Ukraine's gross domestic product has dropped by almost half since Russian troops entered the country, and steel exports are substantially below pre-war levels. The Ukrainian Steel Association warned that if the U.S. import duties take effect as planned on March 12, it would cost the weakened industry 2.4 billion hryvnias ($58 million) in revenue and the government 1 billion hryvnias ($24 million) in taxes a year.

The tariff order was not the only action by the president or his administration to cause alarm in Kyiv last week. Trump signaled changing winds in U.S. policy by having a direct call with Russian President Vladimir Putin, whom former President Joe Biden and other Western leaders had tried to isolate since Putin sent troops into Ukraine.

Trump also said that he would “probably” meet in person with the Russian leader in the near future, heightening concerns that Kyiv would be left out of or undermined in any ceasefire talks. Comments by both the president and U.S. Defense Secretary Pete Hegseth rejecting NATO membership for Ukraine further reinforced the fear that the country no longer had Washington in its corner.

‘Essential support to Ukraine’

Earlier this month, Trump indicated that he wanted to gain access to Ukraine's rare earth materials as a condition for continued U.S. support in the country's defense against Russia.

Ukrainian Economy Minister Yulia Svyrydenko expressed readiness to negotiate with U.S. officials to preserve access to the American steel market.

Ukraine hopes to get an exemption until March 2026 for steel products made in Ukraine, as well as for European Union products made from steel semi-finished Ukrainian steel. The crux of Kyiv’s argument is that the total value of steel supplied to the U.S. from Ukraine directly and via processing in the EU amounts to only 0.81% of total U.S. steel imports and cannot reasonably threaten U.S. industry.

“Maintaining the tariff exemption for Ukrainian steel, including products made in the EU from Ukrainian steel, provides essential support to Ukraine as it continues to resist unprovoked military aggression from Russia,” the Ukrainian Steel Association said in a statement. "The exemption enables Ukrainian steel exporters to sustain their operations, contribute to the national budget and support the broader Ukrainian economy.”

Steel melting workers chat at work at the Zaporizhstal Iron and Steelworks, one of the country's largest steel plants, in Zaporizhzhia, Ukraine, Thursday, Feb. 13, 2025. (AP Photo/Efrem Lukatsky)

At the Zaporizhstal plant in southeast Ukraine's Zaporizhzhia region, smelting iron ore is the first step in a process that culminates in millions of tons of cast iron and steel getting shipped abroad

Zhyvotchenko approaches the colossal mouth of the blast furnace as if it were a dragon’s lair. A gust of oxygen raises the heat to nearly 2,000 degrees Celsius (3,632 degrees Fahrenheit). Workers in full protective gear appear like medieval knights, guiding a luminous flow of liquid steel.

For him and other employees, every day since Russia's full-scale invasion has been a test to produce more with less. The Zaporizhstal complex is operating at 75% capacity and with 12% fewer personnel after many workers were drafted into the Ukrainian army or left the country, according to the plant's owner, international mining and metals company Metinvest Group.

Soaring energy costs

Metinvest lost control of two other steel plants when Russian soldiers occupied the city of Mariupol after a months-long siege in 2022. Russian gains recently cost the company an important coal mine in eastern Ukraine's Donetsk region.

Metinvest suspended operations at the Pokrovsk mine and evacuated workers as Russian troops advanced last month. Coking coal is another essential ingredient in steel production. To keep the Zaporizhstal mill running, Metinvest must import 1 million metric tons (1.1 U.S. tons) of coal a year from Europe and the U.S., plant general manager Taras Shevchenko said.

The grinding war already has brought other challenges, including soaring energy costs due to relentless attacks on Ukraine’s energy grid. Blockades and bombs disrupted trade routes. Complex export logistics required Metinivest to shift its focus from serving Asia and the Middle East to seeking customers in Europe. It was a painful process, Shevchenko said.

Ukraine plans to make the EU part of its exemption pitch because the bloc now accounts for the lion’s share of Ukrainian steel exports. There's worry the U.S. steel tariffs will have unwelcome ripple effects, such as European countries putting import duties on Ukrainian products to offset new taxes on their goods, Metinvest Group Chief Operating Officer Oleksandr Myronenko said.

“This will be a very significant problem for us,” Myronenko said.

Period of uncertainty

Europe is the destination for around 80% of Metinvest’s exported products, he said. The company also has a plant in EU member-state Bulgaria from where reinforcing steel typically used as rods in concrete is exported to the U.S. The rebar shipments would be subject to tariffs as well, and demand may drop as a result, Myronenko said.

“We will have very large problems in the Bulgarian factory," he said.

Plant workers are hoping for the best in this period of uncertainty, they said.

Zhyvotchenko stood outside the industrial complex, the smoke of exhaust seeping up from the ground below, as a rail car delivered gigantic ladles shaped like torpedoes. In the final stages of production, the lava-like metal will be poured into the containers for refining and casting. Then the steelworkers start the process over again.

“We can be tired, we can be tense, we can be anything, but we must endure and must work,” Myronenko said.

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Associated Press journalists Dmytro Zhyhinas in Zaporizhzhia and Voldoymyr Yurchuk in Kyiv contributed to this report.

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