Trump’s steel fees .. What are the expected effects in the markets?

The global steel industry is preparing for the impact of the fees that US President Donald Trump plans to impose by 25%, and is scheduled to start on March 12. Vietnam and India are among the fastest growing steel producers in Asia, and they are especially at risk if Trump imposes comprehensive customs definitions on all US imports of this mineral.

Trump’s duties aim to enhance protection for American producers, but also involves the risk of escalating global tensions in the steel market, which suffers from increased Chinese exports.

In Asia, fears prevail that at least part of the new steel production will be added to the already saturated regional market, if it is not exported to the United States.

More crucifixion for sale
“We may witness the sale of more steel from these countries, especially in Vietnam, as the new goal (customs definitions) will deter them from exporting to the United States,” said Ngim Juan da, head of the steel association in Vietnam, in a telephone conversation with “Bloomberg”. Vietnam, the country in Southeast Asia, has become a major consumers and steel exporters in recent years.

Steeling companies in Asia, Europe and Latin America are already suffering from a cheap Chinese steel flow, as China’s exports in 2024 reached its highest level in nine years, exceeding 110 million tons. This rise sparked a wave of commercial complaints- the most recent of which was from South Korea- and also prompted steel producing companies in other Asian countries to search for new markets.

Chinese steel crowns markets
The executive order issued by Trump said that Chinese exports “crowded production in other countries and compels them to export more steel to the United States.” The European Union reviews its protection measures in response to the increasing steel flows.

In Asia, India is considering imposing preventive measures, as Vietnam has been investigating Chinese steel, and South Korea may conduct more investigations into Chinese products.

The countries of the Asia Pacific region, including Japan, South Korea and Australia, are currently enjoying exemptions from the current US tariffs imposed by the United States in Trump’s first state, as well as Canada, Mexico and a few other countries. A lot depends on whether these countries will be able to negotiate for exceptions from any new round of customs duties.

Steel prices decrease
If this does not happen, “the stock of exporters will be converted into other imported countries at competitive prices, especially in light of an environment that is increasing global competition,” according to Sihoul Bhatt, research manager at the Indian company Crisil Intelligence. He added that this would lead to a decrease in steel prices in India, which is already close to its lowest levels in four years.

There are factors that must be taken into account before reaching a final conclusion. The new customs tariffs have not yet been completed on the minerals imposed by Trump- which also targets aluminum.

In the Asia Pacific region, the influential flow is relatively small, the exports of South Korea, Japan and Australia of steel amounted to about 3.75 million tons last year, according to US government data. The total amount of steel subject to customs definition changes worldwide exceeds 20 million tons.

Specialized solid products
Some affected quantities also include specialized solid products that are expected to continue to flow to the United States even if comprehensive customs definitions are imposed. But American customers will have to pay higher costs.

Japan and Korea export high -quality and specialized types of steel used in energy and auto -industry infrastructure in the United States, which are materials on which companies depend on, Lawrence Chang and Tigo Vespoli, the two analysts at Wood McKinsey, said.

There is also a possibility that the producers will have to reduce production rather than searching for alternative markets that already suffer from excess excess.

“It is almost impossible for the rest of the world to absorb these quantities, given the weak global demand for steel, which means that other productive countries, including China, will have to reduce production ”. (Bloomberg)