Chinese steelmakers were on edge on Tuesday after US President Donald Trump signed an executive order overnight imposing blanket tariffs on all imports of steel and aluminium.
Trump raised levies on all US imports of the two metals to a steep 25%, saying there would be no “exceptions or exemptions… no matter where” they come from.
With his one order, Trump eliminated country exceptions and quota deals as well as hundreds of thousands of product-specific tariff exclusions for both metals.
Also on AF: US-China Trade War Goes Into Gear as Beijing’s Tariffs Kick In
Trump also imposed a new North American standard requiring steel imports to be “melted and poured” and aluminium to be “smelted and cast” within the region to curb US imports of minimally processed Chinese and Russian metals that circumvent other tariffs.
The measures would take effect on March 4.
Asian countries are not among the topmost suppliers of the metals to the US. Still, shares of steelmakers in the region, including those in Korea, India and Japan, have been rattled since Monday, when reports of the planned tariffs first emerged.
On Tuesday, Chinese steelmakers joined the list, with shares at major listed steelmakers in the country sliding on Tuesday.
Shares at Baoshan Iron and Steel, HBIS Co, Angang Steel, Hunan Valin Steel Co, Shandong Iron and Steel Co, Jiangsu Shagang Co slipped between 0.14% and 2.63%.
Steel prices on the Shanghai Futures Exchange ended daytime trade with losses while the CSI steel index dipped 0.52%.
Transit trade in focus
While China exports only tiny volumes of steel to the US, according to Washington it is responsible for much of the world’s excess steel capacity.
It says subsidised production in China forces other countries to export more and leads to transshipment of Chinese steel through other countries into the US to avoid tariffs and other trade restrictions.
That transit trade is at the core of the tariffs announced by Trump, The New York Times reported on Monday.
“In the medium to long term, it’s bad news for the global steel market, as the reduction in US steel imports will eventually hit trading flow,” said Pei Hao, a senior analyst at international brokerage Freight Investor Services (FIS).
A manager at an East China-based steelmaker, requesting anonymity, cautioned of “a butterfly effect on the market, which takes time to manifest.”
“The bad news has not started yet, so we need to be prepared from now,” the manager said.
The new tariffs will likely add more uncertainty to China’s steel exports that are already threatened by mounting global trade tensions.
Last year, robust steel exports, that hit a nine-year high at 110.72 million tons, helped China offset dwindling domestic demand amid an ongoing economic crisis.
Direct Chinese steel exports to the US, however, stood at just 890,000 metric tons — a meagre 0.8% of the total.
- Reuters, with additional editing and inputs from Vishakha Saxena
Also read:
Enemy to Frenemy: West Revisits China Ties on Trump Uncertainty
Xi Jinping Seen Luring Trump Into a New US-China Trade Deal
Trump Inauguration: Cautious China Wants ‘A New Start’ With US
Trump Says He And China’s Xi Will Likely ‘Get Along Very Well’
China Hits Back Against US Firms, as Trade Tensions Heat Up
Trump Planning to Clamp Down on Chinese EV Supply Chains
Economists Say Trump Won’t Hit China With 60% Tariffs Early On
China Seen Taking on More Debt to Counter Trump Tariffs
Trade Wars Would be ‘Catastrophic’ for World Economy: WTO
