Trump’s new tariff policy, expected to be officially announced in the coming days, has triggered global unease. Besides adding to existing tariffs, this decision is set to drive up prices and cut business profits.
Following Trump’s announcement, global financial markets reacted sharply. Stock prices of major steel companies in Asia and Europe plummeted on February 10, reflecting concerns about the negative impact of this policy, according to Reuters.
Impact on Asian Markets
- South Korea: Hyundai Steel’s stock fell 2.9%, while other companies like Dongkuk Steel also saw declines.
- India: The metal sector index dropped 2.5%, marking one of its worst trading sessions in recent times.
A Hyundai Steel official expressed concern:
“We fear these changes will drive up export costs and shrink the 70% tariff-free quota.”
This quota was established during Trump’s first term, allowing South Korea to export up to 70% of its 2015-2017 steel export average to the U.S. tax-free.
Hyundai Steel, which supplies steel to Hyundai and Kia auto plants in the U.S., is even considering building a new steel plant in America to mitigate the effects of the new tariffs.
A Dongkuk Steel representative also acknowledged the difficulties:
“There’s no denying the new tariffs will have an adverse impact. The U.S. remains a high-profit market for us.”
European Stock Markets Hit Hard
Europe’s steel industry also suffered:
- ArcelorMittal (Luxembourg)
- Voestalpine (Austria)
- Thyssenkrupp (Germany)
- Salzgitter (Germany)
All saw their stock prices decline after the announcement.
Analysts at ODDO-BHF Financial Group noted:
“ArcelorMittal will be the most affected, as 13% of its revenue comes from the U.S.“
ArcelorMittal’s CFO warned that if the tariff is enforced, the company could lose up to $100 million per quarter. However, they currently have no plans to ramp up U.S. exports before the tariff takes effect.
Thyssenkrupp also raised concerns, as 5% of its annual steel production is tied to the U.S. market.
Impact on Commodity Prices
The iron ore futures market—a key input for steel production—fell on February 10, reflecting market anxiety over the tariff. This came despite rising steel demand in China, the world’s largest steel consumer.
In contrast, aluminum prices increased slightly, as fears of tightened supply mounted.
Commodity strategist Daniel Hynes from ANZ Sydney commented:
“Prices in regional markets will react first. The 25% tariff will push prices up, especially for domestic U.S. producers.”
The U.S. currently relies heavily on imports:
- 40-45% of its aluminum demand
- 12-15% of its steel demand
Traders are scrambling to secure supplies before the tariff takes effect, potentially causing a steel price surge in the U.S.
A Bloomberg report, citing Morgan Stanley, highlighted that building new metal production facilities in the U.S. is not an immediate solution. Setting up a steel mill or metal processing plant can take at least three years, meaning U.S. metal prices are unlikely to stabilize soon.
Global Steel & Aluminum Trade Disruptions
Trump’s tariff policy has triggered global fears about steel and aluminum trade disruptions. If mismanaged, it could fuel inflation and hinder economic recovery.
According to U.S. government data and the American Iron & Steel Institute:
- Canada, Brazil, Mexico, and South Korea are the largest steel exporters to the U.S.
- Canada is the top aluminum supplier to the U.S.
South Korea’s Emergency Response
Fearing a major hit to its steel industry, South Korea’s Ministry of Industry has held urgent meetings with steel manufacturers to devise countermeasures.
South Korea plays a key role in the global supply chain, providing materials for auto giants like Hyundai and Kia, as well as electronics giants Samsung and LG.
Wider Asian Impacts
Other Asian countries are also preparing for shifts in global trade.
According to Mint, one of the biggest concerns is that China and other producers may redirect excess steel to new markets—primarily India and Southeast Asia.
As the world’s second-largest steel producer, India could become a dumping ground for surplus steel.
Reuters reports that in FY 2023-24, India became a net steel importer, bringing in 3.7 million tons—the highest in six years. If the U.S. further hikes tariffs on Chinese and other steel imports, a global supply glut could push Indian steel prices down, hurting local manufacturers.
Alok Sahay, Secretary-General of the Indian Steel Association (ISA), warned:
“Higher U.S. tariffs on Chinese steel will increase pressure on India’s steel industry, as more excess supply gets diverted here.”
China’s Diminishing U.S. Market
China, the world’s largest steel producer, has already faced Trump’s 25% tariff since 2018, reducing its share of U.S. steel imports to just 1.8%.
Chinese analyst Chu Xinli from China Futures predicted that U.S. demand would drop due to higher prices and slower trade flows.
“Steel shipments originally destined for the U.S. will be redirected to other markets like the EU and Asia, reshaping global steel trade patterns,” he said.
Aluminum Industry Faces Similar Challenges
The aluminum sector is also at risk, as the U.S. is the world’s largest aluminum importer.
- Canada is the U.S.’s biggest supplier, exporting 3.2 million tons last year—twice the amount imported from the next nine countries combined.
- Other top suppliers include:
- UAE (347,034 tons)
- China (222,872 tons)
Experts believe the new tariffs could drive up aluminum prices in the U.S., raising production costs and impacting industries reliant on aluminum, such as:
- Automotive
- Aerospace
- Electronics
Global Economic Risks and Trade War Fears
Charu Chanana, an investment strategist at Saxo Singapore, warned that the biggest threat is not just inflation but the growing instability of the global economy as protectionism rises.
“The U.S.’s tightening of trade policies could trigger a new trade war, with severe consequences for steel and aluminum exporters worldwide.”
With the risk of retaliatory tariffs from major economies, the global trade landscape could see significant disruptions in the coming months.
