China's steel industry, already grappling with overcapacity and sluggish domestic demand, faces a new challenge as U.S. President-elect Donald Trump considers imposing tariffs of 60% or higher on Chinese industrial goods. This potential policy shift, reported by Reuters, could significantly impact China's indirect steel exports, which include manufactured goods like containers, vehicles, and household appliances.
Jiang Mengtian, an analyst at Horizon Insights, noted that the proposed U.S. tariffs would particularly affect manufacturing goods categorized as indirect steel exports. Qi Chunyi, an analyst at Galaxy Futures, estimates that 12.78 million metric tons of these exports could be at risk if the tariffs are implemented.
While the United States accounts for less than 1% of China's direct steel product exports, the indirect impact could be substantial. The tariffs would target a range of goods, potentially disrupting China's steel sector, which relies heavily on these exports to mitigate the effects of domestic market challenges.
The impact of tariffs on China's steel exports is not unprecedented. During Trump's first term, tariffs imposed in 2018 led to a more than 50% decline in the value of exports such as ships and floating structures between 2019 and 2022. This history underscores the potential for significant economic repercussions if similar measures are enacted.
Despite these challenges, China's steel exports have shown resilience. In October 2024, China's steel exports increased by 10.1% month-on-month, reaching 11.18 million metric tons, the highest in nine years. This represents a 40.8% increase compared to October 2023, highlighting the sector's ability to adapt and thrive even amid external pressures.
From January to October 2024, Chinese producers exported 91.89 million metric tons of steel, marking a 23.3% increase year-on-year. This figure already surpasses the total exports of 2023 and is the highest since 2016. If the current trend continues, China's steel exports could exceed 110 million metric tons by the end of the year, demonstrating the industry's robust export capacity.
As the situation unfolds, China's steel industry must navigate the potential challenges posed by new U.S. tariffs while continuing to capitalize on its export strengths. The outcome will likely depend on the industry's ability to adapt to changing trade policies and maintain its competitive edge in the global market.
