Art

The emergence of green steel in the United States has implications far beyond domestic markets. In an interconnected global economy, the decarbonization of steel is reshaping international trade flows, competitiveness, and even geopolitical relationships. For the US, embracing green steel is not only an environmental necessity but also a strategic move to strengthen its global influence.

One of the most significant external factors shaping US green steel is the European Union’s Carbon Border Adjustment Mechanism (CBAM). Once implemented, the CBAM will impose tariffs on carbon-intensive imports, including steel. US producers that fail to adopt green steel methods risk losing access to the European market or facing significant penalties. On the flip side, US companies that successfully transition to low-carbon steel could enjoy a major competitive advantage in exporting to Europe and other regions with strict climate policies.

The Asian markets also play a key role. Countries like Japan and South Korea are investing heavily in hydrogen-based steel production, while China, the world’s largest steel producer, has pledged to peak emissions before 2030 and achieve carbon neutrality by 2060. If the US lags behind, it risks losing ground in global steel trade. Conversely, if it leads in green steel, it could establish itself as a preferred supplier for eco-conscious buyers worldwide.

Green steel also intersects with geopolitics of energy. Hydrogen, a key input for decarbonized steel, is emerging as a strategic commodity. The US, with its abundant renewable resources and strong innovation ecosystem, is well-positioned to become a global leader in green hydrogen production. By integrating hydrogen into steelmaking, the US can reduce reliance on imported fossil fuels, enhance energy security, and strengthen geopolitical independence.

The rise of green steel also affects alliances and trade agreements. Climate-friendly trade blocs are beginning to emerge, where countries align on low-carbon standards to facilitate exchange. The US could play a central role in such alliances, particularly with Europe, Canada, and Japan, creating a coalition of nations committed to sustainable industrial trade. This would further isolate high-carbon producers and accelerate global decarbonization.

However, challenges remain. Developing countries that rely on exporting conventional steel may resist international climate rules, creating tensions in trade negotiations. Additionally, the cost of green steel could impact global competitiveness, particularly in industries such as construction and automotive, where margins are tight. To address this, the US may need to explore international funding mechanisms to help partners transition to greener production.