20.02.2025 10:24
The international credit rating agency Fitch Ratings stated that the new tariffs on steel and aluminum imports by the United States will increase volatility in commodity markets and affect the global economy. It was noted that the effects of the tariffs will depend on the exemptions and the duration of the tariffs.
The international credit rating agency Fitch Ratings stated that the new tariffs on steel and aluminum imports by the U.S. will increase volatility in commodity markets. In a statement from Fitch, evaluations were made regarding the increase in volatility that the U.S. tariff policy will cause in commodity markets.
NEW TAXES START ON MARCH 12
The statement reminded that the U.S. plans to eliminate the exemption and quota system for steel and aluminum imports, reintroduce a full 25% tariff on steel, and increase the tariff on aluminum imports from 10% to 25%, effective March 12. It was also noted that the U.S. announced that a 25% tariff would be applied to most imports from Mexico and Canada, a 10% tariff on Canadian energy resources, and a 10% tariff on China, while tariffs on Mexico and Canada were suspended for one month for bilateral negotiations.
BOTH SECTORS COULD BE DEEPLY AFFECTED
The statement highlighted that the U.S. is largely dependent on aluminum imports for domestic consumption, with about 70% of imports coming from Canada, thus it is expected that the aluminum market will be most affected. It was indicated that tariffs are likely to increase aluminum prices in the U.S., and Canada may increase aluminum exports to Europe to balance U.S. policies, but no significant impact on global supply and demand is expected. The statement pointed out that past tariffs did not effectively increase U.S. aluminum production, and that prolonged tariffs could pressure the profits of sectors using aluminum, such as automobile and beverage can manufacturers.
"THE U.S. WILL CONTINUE TO RELY ON IMPORTS WHILE INCREASING DOMESTIC CAPACITY"
The statement indicated that the U.S. is a net importer of steel and will continue to rely on imports from its largest suppliers, Canada, Mexico, and South Korea, to meet domestic demand while increasing domestic capacity. It was noted that the impact of changes in the tariff system will depend on any remaining exemptions and the duration of the tariffs, emphasizing that these policies are expected to benefit local producers by increasing domestic steel prices in the U.S. The statement pointed out that the U.S. ranks second in steel exports to the European Union, and the removal of previously granted tariff exemptions could affect the profitability of European steel producers.
GLOBAL ECONOMY MAY COME UNDER PRESSURE
The statement indicated that due to the U.S. holding less than 1% share in steel imports, China is expected to be minimally affected by the additional tariffs on steel products. However, it was noted that sub-sectors such as electronics and new energy may face demand shocks due to increased competition from other regions, which could put pressure on China's steel consumption. This situation could redirect China's steel exports to other countries and regions like India and Europe, potentially squeezing the margins of local steel producers. The statement also mentioned that more aggressive U.S. trade policies could exert pressure on the global economy and China's growth, affecting long-term demand for a broader range of commodities, including oil, base metals, and chemicals.