We recently wrote about the Trump administration’s announcement that they would be imposing tariffs on imports of steel and aluminium, in a move that forms part of the presidents ‘America First’ campaign. The tariffs, at least in Congress’s mind, are aimed at rejuvenating the American metal markets and bringing more work back into American companies. But of course, for companies like us across the pond, it means a 25% tariff on steel and a 10% tariff on aluminium.
Metal Market Madness
By imposing these tariffs for ‘a long period of time’ Trump has sparked international fears of a trade war, as countries retaliate to the price hikes. On the day tariffs were announced, global share markets were hit hard as many investors sold shares in European and Asian metal manufacturers and exporters. Japanese manufacturers felt the brunt as their share prices dropped throughout companies, with Toyota dropping by 2.4%, Japan Steelworks by 3.4% KOBE steel by 2.7% and JFE Holdings by 2.8%.
They weren’t the only Asia-based companies to suffer, with China’s Baoshan steel shedding 3.9% of its market value and Yunnan Aluminium fell 1.8%. In South Korea steel manufacturer Posco plummeted by 3.6% and limping behind was Hyundai steel that took a 3% hit.
Although Trump’s tariff threats were directed at China throughout his presidential campaign, the country only accounts for less than 1% of the countries imports. German markets also fell with the German index down 2% against the European wide STOXX 600 that declined 1.4%.
Since he announced the tariffs, Donald Trump has since made temporary exemptions for both Canada and Mexico, who supply large amounts of aluminium to the countries defence manufacturing companies. He has since announced that he will consider the exemption of other allies but without specifying who and how this will be achieved. This means other countries have only been left with vague guidance that the rules will be applied flexibly and has lead to countries both fighting for exemption, as well as preparing for counter-measures with the UK and Japan arranging meetings and trying to strike deals which would exclude them.
Although imposing these tariffs is part of a wider move by Trump, to stimulate the US metal economy, there are fears from within that it could do more damage than good. Although a survey of American steel and aluminium workers suggested that these industries will benefit from increased outputs, other industries feel it will hurt them. Metal is used in the states and world over, to manufacture everything from cars, boats, skyscrapers, roads, bridges, washing machines and even soup cans to name but a few. More expensive steel and aluminium means higher costs for the American Businesses that make these products, costs that will likely be passed onto the consumers, who you can only imagine will also be displeased about this.