Vietnamese Steel Market Suffers Amid US Tariff Decision, Investors Brace for Impact
On February 10, 2025, a major shift in the global trade landscape hit the Vietnamese steel sector, as a swift 25% tariff on steel imports and 10% tariff on aluminum to the United States sent shockwaves through local markets. The immediate impact of these tariff impositions was felt across the stock exchanges, with the market capitalisation of several leading Vietnamese steel companies suffering substantial losses in a single trading session.
Market Reaction and Steel Company Losses
The opening session of the trading week saw six major Vietnamese steel companies experience a combined loss of nearly VNĐ9.2 trillion (US$360.2 million) in market value, an indication of the high investor sensitivity to changes in global trade dynamics. The most significant loss was recorded by Hòa Phát Group, one of Vietnam’s largest steel producers, which saw a staggering reduction of almost VNĐ8 trillion in its market capitalisation.
Hoa Sen Group, another key player in the steel sector, was also severely impacted, losing VNĐ496.8 billion in market capitalisation. While Hòa Phát's shares showed some recovery by gaining 2.8% on February 11, Hoa Sen's shares continued to fall, reflecting the ongoing uncertainty in the market.
Trump’s Tariff Policy and Global Impact
The sharp downturn in the steel sector is primarily attributed to US President Donald Trump’s decision to impose a 25% tariff on steel and a 10% tariff on aluminum imports into the United States. The tariffs are part of an effort to protect American industries from what the administration considers unfair competition. Although some of the US's trading partners, such as Canada, Mexico, and Brazil, were exempted from the tariffs, other nations, including the UK, Japan, and the European Union, were granted additional exemptions later.
However, the Vietnamese steel industry, while not among the top exporters of steel and aluminum to the US, felt the repercussions of Trump's decision. The global trade tension and the increased cost of exports have caused investor anxiety, which significantly influenced the stock market performance of steel-producing companies in Vietnam. These companies now face the dual challenge of dealing with high tariffs on certain exports while also navigating a sensitive market environment.
Vietnam’s Export Scenario in Light of the Tariffs
Though steel and aluminum are not among Vietnam’s top ten exports to the United States, the quick market reaction illustrates the heightened financial sensitivity to changes in US trade policy. Vietnam's steel industry, like other developing countries, is closely tied to global trade flows, which are often influenced by decisions made by major economies such as the United States.
Vietnam, however, may still benefit from its competitive position. According to AFA Capital CEO Nguyễn Minh Tuấn, while the tariff hikes could present risks for Vietnam's steel exports, the country could still benefit from the differentials in tariff rates between itself and its competitors. This means that Vietnam might attract a portion of trade shifts, particularly from countries like China, which could face greater challenges with the US tariffs.
Despite these potential shifts, there is concern over a worst-case scenario where the broader impact of the trade war leads to reduced demand and higher tariffs, affecting the overall health of Vietnam’s export market. The trade tensions could depress demand for steel, aluminum, and other key exports, making it harder for Vietnamese businesses to thrive in international markets.
AFA Capital’s Outlook for 2025
From a financial perspective, AFA Capital views Trump's second-term tariff policy as one of the key risks in 2025. The firm remains cautiously optimistic about Vietnam's export prospects, despite these risks. The market will be watching closely to see how these tariffs evolve and whether Vietnam can maintain its competitive edge in global trade.
While the immediate effects of these tariffs may prove challenging, there is a possibility that Vietnam will continue to find new avenues for growth. The country’s steel sector, though adversely affected in the short term, could adapt over time, with businesses seeking ways to mitigate the impact of tariff barriers and enhance their competitive position.
