At the same time, the Ministry of Economy gives a pessimistic forecast for steel demand at the end of the 2025/2026 financial year

The Trump administration’s tariff policy is blocking steel trade flows and has a significant impact on Japan’s steel industry, which has a high export ratio. This was announced at a briefing by Tadashi Imai, chairman of the Japan Iron and Steel Federation (JISF) and president of Nippon Steel, according to Mysteel Global.

In addition, he noted that Japan is increasingly participating in trade events of countries and regions targeting China amid the export offensive of manufacturers from that country, and this trend will continue next year.

Tadashi Imai warned that the environment for the Japanese steel industry in the next fiscal year (2026/2027, starting April 1, 2026) will remain the same as in the previous fiscal period, and it will take more time for steel demand to recover.

Earlier, the country’s Ministry of Economy, Trade and Industry (METI) gave a pessimistic forecast for domestic and export demand for steel for January-March 2026. In particular, as noted by the ministry, the growth of the country’s construction industry continues to be hampered by a shortage of labor and rising material prices. Other manufacturing sectors, except for the automotive industry, are also not showing any significant recovery.

According to the ministry’s forecasts, total demand for steel in Japan in January-March 2026 will reach 18.6 million tons, down 1.6% year-on-year and only 0.1% higher than in October-December.

Steel production in the country in the last quarter of the 2026/2026 fiscal year is expected to be 20.05 million tons (-1.7% y/y).

The JISF expressed similar concerns about market conditions for the next fiscal year. In particular, it anticipates a slight increase in civil construction volumes due to an increase in public works reserve funds, but labor shortages and rapid growth in material prices will remain.

The main demand from the automotive industry will be lower than in the 2025/2026 fiscal year, the JISF noted. It is also expected that domestic demand for steel, in addition to the impact of US tariff policy, will also be indirectly affected by China’s continued export campaign to sell electric vehicles to ASEAN.

It should be recalled that Japan plans to allocate 210 billion yen ($1.34 billion) to help companies that use clean energy to finance investments. The country seeks to increase demand for renewable energy and stimulate growth in the regions.