(Bloomberg) -- Steel producers in South Korea and Japan are getting hammered by U.S. President Donald Trump’s plan to hike tariffs on imports and the risk of a global tit-for-tat trade war.
Mills in South Korea, the third-biggest supplier of steel to the U.S., tumbled as trading resumed after a holiday. Posco slid 3.3 percent while Hyundai Steel Co. was 3 percent lower in Seoul. Japanese producers also continued the sell-off that began on Thursday as news of the tariffs broke, with Kobe Steel Ltd. losing 3.4 percent and Nippon Steel & Sumitomo Metal Corp. sliding 3.9 percent.
Trump said the U.S. will impose tariffs of 25 percent on imported steel and 10 percent on aluminum for “a long period of time,” and he expects to sign a formal order next week. While he has made no secret of his intention to protect American interests against foreign markets, the threat that other nations will retaliate is prompting concern that key export markets will be shut off to producers around the world.
The planned tariffs raise “risks of an all-out trade war, which could dampen economic growth and weigh on the sector,” Australia & New Zealand Banking Group said in note.
Much of Trump’s protectionist agenda is directed at China, but the Asian nation isn’t a major exporter of steel to the U.S. That may explain why the reaction in Chinese steel stocks may be less pronounced when they start trading. The listed units China’s Baoshan Iron & Steel Co. and Hesteel Co., its two-biggest mills, dropped 0.7 percent and 1.3 percent respectively on Thursday.
Although China has figured large in Trump’s protectionist rhetoric, it accounts for just 2 percent of U.S. imports, and its shipments generally are falling as robust domestic growth soaks up metal and the government cuts capacity as part of a drive to clean up the environment.
The impact is potentially greater for China’s aluminum industry, the fourth-biggest supplier to the U.S. China Hongqiao Group and Aluminum Corp. of China Ltd., its two biggest producers, fell more than 1.8 percent in intraday trading on Thursday.
The U.S. took 14 percent of China’s aluminum exports last year, as the Asian nation’s overseas shipments and production both rose to a record.
