Why Donald Trump’s new tariffs aren’t likely to hurt junior Aussie miners
Link copied to
President Donald Trump’s move to tax steel and aluminium imports is unlikely to impact ASX juniors — including those who supply raw materials to Asian powerhouse China.
President Trump plans to introduce a 25 per cent tariff on steel imports and a 10 per cent tariff on aluminium in an effort to rebuild US domestic metal industries.
Over the weekend US stocks erased their gains for the year on concerns of retaliation from America’s trading partners — though at least one expert said the sell-off was overblown.
Australia exports relatively small volumes of steel and aluminium to the US — about $450 million a year.
China is Australia’s largest trading partner in imports and exports — so any impact of the tariffs on China would have a flow-on effect for Australia.
But the US is not a big market for China either — it sits outside the top 10 steel exporters to the country.
“The Chinese would just shrug their shoulders with respect to the Section 232 announcement because the US only accounts for about 2 per cent of China’s steel exports,” S&P Global Patts senior managing editor Paul Bartholomew told Stockhead.
Section 232 refers to part of the US Trade Expansion Act under which US Commerce Secretary Wilbur Ross concluded that imports of steel and aluminium threatened America’s national security — which prompted Mr Trump to propose the restrictions.
“The US actually had very tough anti-dumping measures in place even before Donald Trump became president,” Mr Bartholomew said.
“So the Chinese have gotten used to exporting into other markets around the world.”
Junior iron ore producers Atlas Iron (ASX:AGO) and BCI Minerals (ASX:BCI) ship their raw products product to China.
Steel and aluminium tariffs are more likely to hurt Japan and South Korea, which account for 5 per cent and 10 per cent of US steel imports.
Japan and South Korea will likely need to find new markets to sell into, which would create greater competition for China and put steel prices under pressure.
“You could potentially have a case where the Chinese buyers point to weaker steel prices as a kind of bargaining tool for trying to push prices down, but at the end of the day I don’t see any impact on iron ore imports into China because of this,” Mr Bartholomew noted.