Steel – a commodity that unpins much of the world’s infrastructure, economic development and competitiveness – has just found itself with a complete change in internal market dynamics and conditions.


Donald Trump announced earlier this year that the US will be imposing significant tariffs on the import of steel and aluminium, 25% and 10% respectively, and both “for a long period of time”. To provide some context; President Trump ordered the investigation into both the industries surrounding these hard commodities in April 2017. Under a law passed in 1962, the White House can be granted authority to be able restrict imports should there be a reason to believe that a national security threat is present. The Department for Commerce found that the imports were harming US markets which could eventually have ramifications for the defence industry which in turn provided the justification for the tariffs, the Washington post reports. The White House has the power to implement such measures without the need for any form of Congressional Approval and many have taken questioned how the security concerns have been able to validate the use of such a divisive economic tool.

Mr Trump claims “trade wars are good and easy to win” which has caused angry responses across the pond and around the world with a range of countries planning retaliation measures or further countermeasures.


A few examples of what the US can expect in return:

· European Union – cranberries, peanut butter and orange juice are all possibilities for tariffs.

· China – promises a “necessary” response to the US’ tariffs and that Trump’s measures will only be “harmful”.

· Brazil – noted that “80% of steel exports are semi-finished products” and provide “important inputs for the American steel industry” – which it would subsequently risk losing.

· Germany – promises a “cool and clear” retort. German car makers with manufacturing in the US (i.e. VW, BMW) warn of a loss of jobs on US soil – the benefits to the US in isolation in which case become more blurred.


Markets around the world have reacted to this and has resulted in an almost immediate shift in a range of indices, including (as of Friday 2nd March 2018); the benchamark Topix Index (down 1.8% ), South Korea’s Posco (falling 2.9%), Nikkei 225 down nearly 2% by mid-morning. Given the clear prominence of steel used in manufacturing, this has also had an impact on those direct users of the material; namely Toyota, which was also met with a reduction in share price.


Given just how far steel reaches into manufacturing, construction etc. it would appear that few companies are immune from such impacts – either now or in the medium term as the shift trickles through the supply chain. Toyota said that the tariffs would “adversely impact automakers, the automotive supplier community and consumers” and that US consumers would be hit with significantly higher prices for its vehicles.


More recently, despite the fact that Trump has advised some countries may be except from charges for up to 30 days (Canada and Mexico appearing to the main beneficiaries in line with NAFTA), the overall tone remains sour and the prospect of a trade war ever-increasing. In a time of broad intent to move towards globalisation, this exercise presents yet another example of a country breaking from the pack and protecting its own interests. Moreover, this is conducted on the grounds of National Security – an excuse that many consider unsatisfactory and which will ultimately lead towards “a trade war with no winners”.


One of OCI’s key commodities is steel and we have a diverse network of suppliers and buyers across the globe. Additionally, as the result of a decade of trading, we have extensive experience in how to pivot and react to turbulent market conditions. Despite the changing landscape, we are committed to ensuring that our supply channels remain open and that prices are insulated as much as possible against the wider market backdrop.


For more information on how OCI can aid you through this transition, please contact us on any of the below contact methods:



Telephone: +44 (0) 203 137 7326