Winners and losers from Trump’s tariffs on aluminum and steel

Bloomberg.- U.S. President Donald Trump is expected to unveil harsh tariffs on steel and aluminum imports and if he gets his way, the policy could have sweeping ramifications across the globe. Here are some of the likely winners and losers.

Winner: U.S. Steelmakers
Domestic producers, such as Nucor Corp., AK Steel Holding Corp. and U.S. Steel Corp., will reap the benefits. They have aggressively lobbied for trade defenses against what they see as unfair competition from China, Russia and South Korea.

A tariff around the level currently discussed — 25 percent on steel and 10 percent on aluminum from all countries — is expected to drive up U.S. steel prices. Domestic hot-rolled coil, an industry benchmark, has already rallied in anticipation, reaching about $780 a metric ton, according to Metal Bulletin prices.

Loser: U.S. Neighbors
While China has long been the bogeyman of the steel industry and scorned by politicians for flooding the market with cheap products, it’s not the biggest seller into the U.S. That title goes to Mexico, Canada and Brazil.

It’s Complicated: U.S. factory workers
Republicans in steel-making states like Pennsylvania, Indiana and Michigan will have a good message to take home in the 2018 midterms. Protecting blue-collar workers was one of Trump’s key election promises, and this could be a success for the party, despite delays in their other legislative ambitions.

In the longer term, there could be mounting pressure for manufacturers who have to pay more for steel and aluminum. They employ more workers than steel and aluminum mills, and Anheuser-Busch InBev NV has already urged Trump to reconsider. The Budweiser brewer said higher U.S. aluminum tariffs could cost thousands of U.S. jobs and raise costs by millions of dollars.

Loser: Global relationships
Other countries are already talking about the possibility of retaliation. In China, one of President Xi Jinping’s top economic advisers has been dispatched to the U.S. in attempt to defuse tensions. China is investigating U.S. imports of sorghum and studying whether to restrict shipments of U.S. soybeans. The European Union has said it will take action if “unjustifiably hit” by the tariffs.

Loser: South East Asia
South East Asian markets will likely have to absorb the redirected steel flows. The global steel industry has been described as a game of whack-a-mole — when exports are blocked in one country, they end up shifting somewhere else.

One way this could play out: Asian companies that used to sell steel to the U.S. could find their product uncompetitive because of the tariffs. So instead, they have to turn to other markets in the region to offload the product.

Winner: ArcelorMittal
The steel-making giant is also the biggest producer in the U.S., and supplied building material for New York’s One World Trade Center. It has long argued for trade defenses to protect its core markets, and tariffs would be a big positive.

But, depending on how the rules are applied, it may face higher costs. For example, it’s unclear if ArcelorMittal’s imports of steel slabs from Brazil to its plant in Alabama would be subject to tariffs.

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