On  11 July, the US announced plans to impose 10% duties on another $200 billion of Chinese goods. These could impact some 3 million tonnes/year of demand for Chinese steel, far more than the section 232 tariffs. The more important impact may still lie in China’s response, which could boost steel demand by a larger amount.

One key factor for iron and steel is that the new duties would fill in the gaps left over from the section 232 tariffs. The earlier 25% duties on steel imports actually missed out some products which are normally included in steel trade data, such as some kinds of pipe and pipe fittings. Of these products, China exported 387,274t to the US in 2017, up 16.88% year-on-year. Exports to the US accounted for 17.68% of China’s total exports of these products.

In addition to filling in the gaps in steel products, the proposed duties target a large number of manufactured steel-containing goods, These include such items as doors, windows, tanks and sinks that could also impact steel demand in China. In 2017, China exported some 2.83mt of these goods to the US, up 6.45% y-o-y. This accounted for almost 20% of China’s total exports of the same goods. As these goods are primarily made of steel, the tariffs could have an equivalent impact on Chinese finished steel demand from manufacturing.

Finally, the duties also target imports of pig iron, ferroalloys, DRI and scrap from China. These in total amounted only to 37,745t in 2017, although up 57.2% y-o-y.