China Imposes MFN Rates on Turkish Steel Products in the Absence of a Free Trade Agreement
As of January 1, 2025, China has enacted Most Favored Nation (MFN) rates on various steel products imported from Turkey, marking a significant shift in trade dynamics between the two countries. Due to the absence of a free trade agreement (FTA) between Turkey and China, these new tariff structures will apply to a range of steel products, including pig iron, billets, and cold-rolled coils.
In a recent announcement, the State Council Tariff Commission of China confirmed the imposition of the MFN rates, which will affect specific steel categories. The MFN rates represent the standard customs duty levied on these products, while certain Turkish exports to China will also benefit from temporary reduced customs duties for the year 2025.
The Steel Products Affected and Tariff Structure
China’s new MFN tariffs apply to a list of Turkish steel products, primarily falling under steel, iron, and alloy categories. Some of these products, especially pig iron, alloyed steel billets, and cold-rolled coils, will see the introduction of temporary duty reductions.
The table below outlines the key steel products from Turkey, their corresponding MFN rates, and temporary duty rates for 2025:
China Imposes MFN Rates on Turkish Steel Products Starting 2025
Due to the absence of a free trade agreement between Turkey and China, China has introduced Most Favored Nation tariff rates for various steel products from Turkey. These new rates, effective from January 1, 2025, will impact products like pig iron, billets, and cold-rolled coils, among others. However, certain steel exports from Turkey will benefit from temporary reduced customs duties for the year 2025.
Here’s a breakdown of the MFN and temporary duty rates for Turkish steel products:
• Pig Iron: The MFN rate for pig iron will be 1%, but for 2025, there will be a 0% temporary duty applied.
• Steel Produced from Direct Reduced Iron Ore: This product will be subject to a 2% MFN rate, with a 0% temporary duty in 2025.
• Other Sponge Iron Products: Similarly, sponge iron will incur a 2% MFN rate but will enjoy a 0% temporary duty.
• Iron and Non-Alloyed Steel Ingots: The tariff on these ingots will remain at 2% MFN, with the 0% temporary duty for the year.
• Rod: The 2% MFN rate will apply to rods, while the 0% temporary duty will be in effect for 2025.
• Rectangular Billet: This category will be subject to a 2% MFN rate, with 0% temporary duty.
• Cold Rolled Coil: For cold rolled coils, the MFN rate is 6%, but the temporary duty is lowered to 4% in 2025.
• Stainless Steel: Stainless steel products will face a 2% MFN rate, with a 0% temporary duty.
• Alloyed Steel Billet: The 2% MFN rate will apply, along with a 0% temporary duty for the year.
• Ferro-nickel Alloyed Strip: This product has a 7% MFN rate, but the temporary duty is reduced to 4% for 2025.
While these tariff changes may present some challenges, the temporary reductions for several steel categories offer an opportunity for Turkish exporters to remain competitive in the Chinese market, despite the lack of an official FTA between the two countries.
Impact of MFN and Temporary Duty Reductions
The MFN rates reflect China’s general tariff levels applied to countries with which it does not have a free trade agreement. However, in a positive development for Turkish exporters, certain steel products will benefit from temporary reduced customs duties. For example:
• Pig iron and steel produced from direct reduced iron ore will be subject to 0% duty for 2025, a significant reduction from the standard 1% and 2% MFN rates, respectively.
• Cold rolled coils will have a temporary duty of 4% instead of the regular 6% MFN rate.
• Other products such as stainless steel, alloyed steel billets, and rectangular billets will continue to enjoy temporary zero duties.
This arrangement provides an opportunity for Turkish manufacturers to remain competitive in the Chinese market, despite the absence of an official FTA between the two countries.
Strategic Considerations for Turkish Exporters
The introduction of these new tariffs emphasizes the importance of strategic planning for Turkish exporters of steel products. Those businesses exporting the affected products must stay aware of the temporary tariff reductions and leverage these advantages to maintain or increase market share in China, which remains one of the world's largest steel importers.
Given that steel exports represent a significant part of Turkey's manufacturing sector, trade policy changes such as this one are critical in maintaining export growth. Turkish companies will need to stay vigilant on trade developments to make the most of the temporary reduced tariffs and continue to compete in the Chinese market.
A Changing Landscape for Global Steel Trade
The evolving relationship between Turkey and China also highlights the broader dynamics of global steel trade. As China adjusts its tariff structures, other countries may find themselves facing similar changes, particularly in industries like steel where global demand remains high and trade agreements are crucial for market access.
With the temporary reductions in place for specific steel products, Turkish exporters now have a chance to expand their presence in China without the burden of high tariff rates, providing some breathing room for further market penetration.
