Rising Pressure from Imported Galvanized Steel
Vietnam’s steel industry is facing considerable challenges due to the growing influx of galvanized steel imports from China and Korea. The rising volume of imported galvanized steel is directly impacting the country’s domestic producers, who are finding it increasingly difficult to compete with the low prices of foreign steel. The Vietnam Steel Association (VSA) has raised alarms about this trend, arguing that it could harm the stability and future growth of local steel manufacturers. To address this, the VSA has formally requested the Vietnamese government to impose tariffs on galvanized steel imports from these two countries. The goal is to shield local producers from the unfair competition that these imports are creating.
Concerns Over Import Volumes
The volume of galvanized steel imports from China and Korea has been steadily increasing in recent years, leading to a significant market imbalance. During the 2022-2023 period, imports from these two countries accounted for a staggering 64% to 67% of all steel imports into Vietnam. This influx is making it increasingly difficult for local steel producers to maintain their market share. The government has already acted to protect its domestic industry by imposing temporary anti-dumping levies on certain Chinese steel products. These levies range from 19.38% to 27.83%, targeting specific hot-rolled steel products that are crucial to the production of galvanized steel. However, the VSA has pointed out that while hot-rolled steel is being protected, there are no such protections in place for galvanized steel imports. This lack of protection creates a critical gap, putting local manufacturers at a disadvantage in the competitive market.
Impact on Domestic Industry
The potential impact of continued imports of low-cost galvanized steel is serious, not just for the galvanized steel sector, but for the entire domestic steel industry in Vietnam. The VSA has warned that if the situation is not addressed, it could lead to significant damage to the domestic steel industry, causing long-term economic repercussions. The total value of steel and iron ore products imported from China reached nearly $12 billion in 2023, according to data from Vietnam’s customs. This high import value underlines the extent to which foreign steel is flooding the Vietnamese market, and how critical it is for the government to take protective measures.
The VSA’s proposal to impose tariffs is intended to curb this flood of imports and level the playing field for local producers. Without such measures, the association argues, the local steel industry will continue to face severe challenges, and there may even be significant job losses in the steel manufacturing sector. The continued loss of market share to foreign imports could also impact other related industries, including construction, automotive, and manufacturing, which rely heavily on domestically produced steel.
Challenges from U.S. Trade Actions
In addition to domestic concerns, Vietnam’s steel industry is also grappling with external challenges, particularly from the United States. The U.S. administration has recently announced a sweeping 25% tariff on all steel imports, which is set to take effect on March 4, 2025. This move is part of a broader strategy by the U.S. to protect its own steel industry from foreign competition. For Vietnam, which relies heavily on steel exports, particularly to the U.S., this new tariff could significantly affect its trade balance.
This tariff announcement comes on the heels of existing U.S. anti-dumping duties, which have already been imposed on several Vietnamese steel exports. In some cases, these duties are even higher than the 25% tariff that will be implemented. As a result, Vietnamese steel exporters face the risk of even steeper costs and reduced market access. The U.S. tariffs could also have a ripple effect on Vietnam’s economy, as the U.S. is one of its top export markets for steel and other manufactured goods.
The VSA has expressed concern that if the U.S. tariffs are enforced in addition to existing anti-dumping duties, it could severely impact the overall competitiveness of Vietnam’s steel exports, making it harder for the country to maintain a strong presence in international markets. This could lead to a further downturn in the steel industry and damage its long-term viability.
Vietnam’s Response to Tariffs
Given the growing pressure from both rising imports and potential new tariffs from the U.S., the Vietnamese government is exploring various measures to protect its domestic steel sector. These measures may include imposing additional tariffs on foreign steel imports, including galvanized steel, as well as implementing trade policies aimed at improving the competitiveness of domestic steel producers.
Vietnam may also seek to negotiate with the U.S. to avoid the full impact of the new 25% tariff. This could involve pushing for exemptions or a reduction in the tariffs on certain Vietnamese steel products. Additionally, the government is considering possible retaliatory measures to offset the impact of U.S. tariffs, which could include increasing tariffs on U.S. products imported into Vietnam. However, such actions would need to be carefully weighed to avoid escalating trade tensions and damaging Vietnam’s overall trade relationships.
While the situation remains fluid, it is clear that the Vietnamese steel industry is facing an uncertain future. The government’s response will play a crucial role in determining whether local manufacturers can weather the storm of rising imports and tariffs. The VSA’s proposals and the government’s actions will be closely watched by both domestic and international observers, as the outcome will have significant implications for Vietnam’s steel industry and its broader economy.
KEY TAKEAWAYS:
• The Vietnam Steel Association is advocating for tariffs on galvanized steel imports from China and Korea to protect local producers from unfair competition.
• Imports from China and Korea accounted for 64% to 67% of total steel imports into Vietnam during the 2022-2023 period.
• The Vietnamese government has implemented temporary anti-dumping levies on Chinese hot-rolled steel products, but no protections currently exist for galvanized steel imports.
• Steel and iron products imported from China were valued at nearly $12 billion in 2023, indicating a high volume of foreign steel entering Vietnam’s market.
• The U.S. administration plans to impose a 25% tariff on all steel imports starting on March 4, 2025, which could significantly impact Vietnam’s steel exports.
• The Vietnamese government is exploring protective measures, including tariffs and negotiations with the U.S., to shield its domestic steel industry from further harm.
