Trump's Tariff Onslaught Shakes Up Metal Stocks

The US President Donald Trump's latest decision that his administration would impose a 25 per cent tariff on the imports of steel and 10 per cent on imported aluminum entering the US, has shaken the stock market and rattled some of the US’ closest trading partners. Trump’s decision came on the heels of series of investigations by the US Commerce Department, which eventually concluded unfairly traded imports of both metals have killed off American mills and jobs, threatening national security. The commerce department investigations into the effects of steel and aluminium imports on national security, amply proved that China flooded the international market with artificially cheap metals, depressing prices and annihilating the US-based factories, that claim to be among the most efficient and least polluting in the world.  

Interestingly, the US had earlier (in the recent past) imposed 164 trade penalties on unfairly traded steel imports, mostly from China, and it is considering another 20. In the process of fighting these legal battles, the steel industry has already coughed up hundreds of millions, which in turn resulted in a 60 per cent increase since the turn of the century. But more interestingly, China had allegedly found ways of evading such penalties by shipping their products through countries like Vietnam, Malaysia or Sri Lanka.

Meanwhile, according to a recent report by S&P Global Platts, the top five Asian suppliers of steel to the US in 2017 were South Korea, Japan, Taiwan, Vietnam and China. The Korea Iron and Steel Association said it was planning to "actively" react to the "unfair trade regulation," and to raise and urge on the Organisation for Economic Co-operation and Development (OECD) to actively intervene and immediately sort out the vexed issue and resolve this "unfair treatment." Posco, the fifth biggest steel maker in the world, on its parts, said that it would certainly collaborate with industry stakeholders and the government more vigorously and react to the upcoming situation carefully. An official at Japan's Ministry of Economy, Trade & Industry said that it would wait until Section 232 is officially ratified before considering what action to take. Meanwhile, the Japan Iron and Steel Federation branded the announcement as a market-distorting measure, which would have serious harmful impacts not only on steel exports from Japan but would also have adverse impacts on steel trade worldwide.