LONDON • US President Donald Trump was scheduled overnight to unveil harsh tariffs on steel and aluminium imports and if he gets his way, the policy could have sweeping ramifications across the globe. Here are some of the likely winners and losers.
Winner: US Steelmakers
Domestic producers, such as Nucor Corp, AK Steel Holding Corp and US Steel Corp, will reap the benefits. They have aggressively lobbied for trade defences against what they see as unfair competition from China, Russia and South Korea.
A tariff around the level currently discussed — 25% on steel and 10% on aluminium from all countries — is expected to drive up US steel prices. Domestic hot-rolled coil, an industry benchmark, has already rallied in anti- cipation, reaching about US$780 (RM3,065) a metric tonne, according to Metal Bulletin prices.
Loser: US Neighbours
While China has long been the bogey- man of the steel industry and scorned by politicians for flooding the market with cheap products, it’s not the biggest seller into the US. That title goes to Mexico, Canada and Brazil.
It’s Complicated: US factory workers
Republicans in steel-making states like Pennsylvania, Indiana and Michigan will have a good message to take home in the 2018 midterms. Protecting blue-collar workers was one of Trump’s key election promises, and this could be a success for the party, despite delays in their other legislative ambitions.
In the longer term, there could be mounting pressure for manufacturers who have to pay more for steel and aluminium.
They employ more workers than steel and aluminium mills, and Anheuser-Busch InBev NV has already urged Trump to reconsider.
The Budweiser brewer said higher US aluminium tariffs could cost thousands of US jobs and raise costs by millions of dollars.
Loser: Global relationships
Other countries are already talking about the possibility of retaliation.
In China, one of President Xi Jinping’s top economic advisors has been dispatched to the US in attempt to defuse ten- sions. China is investigating US imports of sorghum and studying whether to restrict shipments of US soybeans.
The European Union has said it will take action if “unjustifiably hit” by the tariffs.
Loser: South-East Asia
South-East Asian markets will likely have to absorb the redirected steel flows. The global
steel industry has been described as a game of whack-a-mole — when exports are blocked in one country, they end up shifting somewhere else.
One way this could play out: Asian companies that used to sell steel to the US could find their product uncompetitive because of the tariffs. So instead, they have to turn to other markets in the region to offload the product.
The steel-making giant is also the biggest producer in the US, and supplied building material for New York’s One World Trade Centre. It has long argued for trade defences to protect its core markets, and tariffs would be a big positive.
But, depending on how the rules are applied, it may face higher costs. For example, it’s unclear if ArcelorMittal’s imports of steel slabs from Brazil to its plant in Alabama would be subject to tariffs. — Bloomberg