US steel tariffs another blow to iron ore


The trade war is back:

The new tariffs Biden is pushing — meant to shore up the American steel sector and court its workers — would impose 25% levies on certain Chinese steel and aluminum products. They would be applied as part of an ongoing review, while the US also launches a formal probe into China’s shipbuilding industry.

But analysts said the steps would have minimal economic impact. Imports of Chinese steel and aluminum totaled roughly $1.7 billion in 2023, a small sliver of the overall market.

“There is effectively no market impact – this is a political statement,” said Colin Hamilton, managing director of commodities research at BMO Capital Markets Ltd, noting that only 2% of steel and 4% of aluminum imports were from China last year.

True. But the US imported 28mt. Most of it came from Canada, Mexico and Brazil.

In turn, some of that will have come from China, particularly the 4.2mt from Mexico.

If these tariffs are diligently applied by third-party countries, the effect will still be small but it will increase the Chinese glut as the US sources more local supply.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.