The recent decision by the US to impose a 25% tariff increase on all steel and aluminum exports has sparked concerns within the global steel industry.
China’s Iron and Steel Association has specifically voiced its apprehension, stating that this tariff hike will negatively affect the intricate supply chain of the global steel industry, including China’s own steel sector.
This statement was reported by the state broadcaster China Central Television on Thursday.
Multifaceted ramifications
The potential ramifications of this tariff increase are multifaceted.
For instance, it could disrupt the established flow of steel and aluminum between countries, leading to supply shortages or delays.
Additionally, it could increase the cost of steel and aluminum products for businesses and consumers, potentially dampening demand and slowing economic growth.
Furthermore, it could heighten trade tensions between the US and other countries, particularly China, and could lead to retaliatory measures that further destabilise the global trade environment.
In an attempt to bolster the struggling US steel and aluminum industries, President Donald Trump imposed a 25% tariff on all imports of the two metals on Monday.
The tariffs will be applied across the board, with no exceptions or exemptions, a decision that could trigger a global trade war.
Tariffs may hurt in the long-term
“In the short term, the impact on China’s steel exports is limited.
However, in the long run, the United States may drive other countries to follow suit, thereby reducing the competitiveness of China’s steel exports,” the association said.
In 2024, China exported 508,000 net tons of steel to the US, according to a Reuters report.
This figure represents a small but not insignificant portion of the total American steel imports, accounting for 1.8% of the overall volume.
While not the largest source of imported steel for the US, China’s contribution to the American steel market remains a noteworthy aspect of the global steel trade landscape.
The tariff increase was firmly opposed by Zhang Longqiang, deputy secretary-general of the China Iron and Steel Association, who told Reuters that it was not conducive to “healthy and fair trade and market competition.”
He further added:
In the medium to long term, the increase in tariffs will have an adverse impact on the industrial chain and supply chain of the global steel industry, including China’s steel industry.
China responsible for global steel glut
Although China’s direct steel exports to the US are minimal, the American government contends that China plays a major role in the global oversupply of steel.
This excess capacity is due to a multitude of factors, including government subsidies, low-cost production, and a focus on infrastructure-driven economic growth.
The resulting glut of steel has depressed global prices and negatively impacted steel producers in other countries, including the US.
This has led to trade tensions and the imposition of tariffs by the US in an attempt to protect their domestic steel industries.
The United States claims that subsidised steel production in China is causing other countries to increase their steel exports.
This has led to Chinese steel being shipped through other countries and into the US, in an attempt to circumvent tariffs and trade restrictions.
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