The plan of U.S. President Donald Trump to hike tariffs on imports and the risk of a global tit-for-tat trade war is hitting South Korea and Japan’s steel manufacturers.
Mills in South Korea, the third largest steel supplier to the U.S., went down. Posco also fell 3.3 percent, while Hyundai Steel Co. decreased 3 percent in Seoul.
Meanwhile, Japanese producers have resumed the sell-off that started on Thursday as the news about the tariffs broke, with Kobe Steel Ltd. losing 3.4 percent and Nippon Steel & Sumitomo Metal Corp. fell 3.9 percent.
According to U.S. President Donald Trump, the U.S. will impose tariffs of 25 percent on imported steel and 10 percent on aluminum for “a long period of time.”
“People have no idea how badly our country has been treated by other countries,” Trump stated. “They’ve destroyed the steel industry, they’ve destroyed the aluminum industry, and other industries, frankly.”
Trump has made no secret about of his move to protect American interests against foreign markets. However, the risk that other nations will retaliate is stimulating concern that the key export markets will be shut off to the producers around the globe.
“The planned tariffs raise risks of an all-out trade war, which could dampen economic growth and weigh on the sector,” stated Australia & New Zealand Banking Group.
On the other hand, stocks went down in response to the potential tariffs. Meanwhile, the drop in the industrial sector is outpacing the overall market. The shares of American automakers, all large consumers of steel and aluminum, have declined as well.
Trump’s Tariffs to Impact Automakers
The auto industry is warning that the U.S. sales might drop continuously. This is because of Trump’s tariffs that he plans to slap on steel and aluminum imports.
According to Toyota Motor, the decision of the administration will “adversely impact” automakers.
Trade groups representing automakers tried to warn the administration of unintended consequences before Trump announced his plans on Thursday.
“These proposed tariffs on steel and aluminum imports couldn’t come at a worse time,” said the president of the American International Automobile Dealers Association, Cody Lusk.
“Auto sales have flattened in recent months, and manufacturers are not prepared to absorb a sharp increase in the cost to build cars and trucks in America.”
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