By AFP - Agence France Presse
Steel at the center of Trump's new trade war
Paris (AFP) - The new tariffs on steel imposed by US President Donald Trump promised to further complicate a strategic sector already destabilized by Chinese overproduction and the shutdown of European blast furnaces.
Recently returned to the White House, the trade war long promised by the mercurial Republican will forge a new front on Monday with an expected 25% tariff on aluminum and steel imported by the United States.
Trump imposed similar tariffs during his first term to protect American producers facing what he complained was unfair competition.
Who exports steel to the US?
Global steel production reached 1.89 billion tons in 2023, according to the latest figures from trade body World Steel.
World leader China, with 1.02 billion tons, accounts for more than half of this total, with the United States close behind with 81 million.
Meanwhile, the United States imported 26.4 million tons of alloy in 2023, making it the second largest foreign steel market behind the European Union.
Canada tops the list of Washington's preferred steel suppliers, with the United States importing 5.95 million tons from its northern neighbor in 2024, according to the US Department of Commerce.
Brazil and the EU come next, with 4.08 million and 3.89 million tons exported to the United States, respectively, ahead of Mexico, with 3.19 million, and South Korea, with 2.5 million.
However, China only exported around 470,000 tons to the United States.
Why is Trump complaining?
The global overproduction of the alloy caused steel prices to plummet last year.
This surplus of steel ranges around half a billion tons, according to the Organization for Economic Cooperation and Development.
“Most of it comes from China, which is flooding world markets,” a European steel industry official told AFP on condition of anonymity.
Historically, production capacity in Europe and the US was generally balanced and in line with domestic needs, the source said.
“But in Southeast Asia (production) far exceeds demand.”
And new steel mills planned in the region are expected to add another 100 million tons of production capacity - “80% of which comes from Chinese companies” - on top of the existing surplus, they added.
In addition, it has long been suspected that Beijing indirectly subsidizes its steel production, which causes prices to fall and puts traditional European and US companies at a disadvantage.
As a result, US Steel, which is being criticized, was the subject of a takeover bid by Japanese rival Nippon Steel, which was blocked by then President Joe Biden.
With low prices putting pressure on profits, Germany's ThyssenKrupp has announced that it will lay off thousands of people working in its furnaces.
Why is steel important?
Steel, so important to the second industrial revolution of the late 19th and early 20th centuries, remains a strategic sector worldwide.
It is the fundamental beam on which many traditional industrial sectors rest.
Just over half of the steel produced in 2023 was still destined for construction, while 12% of the rest went to car manufacturers.
Weapons manufacturers, railroads, and other transportation sectors are also among the main consumers of the alloy.
But its use in wind turbines means that steel is also essential for the transition to renewable energy.
It is also needed to build the data centers used to house the vast amounts of information essential for the development of artificial intelligence.
Is there such a thing as green steel?
The manufacturing process, which involves burning coal to melt steel from iron ore, makes the sector the biggest emitter of greenhouse gases that warm the planet.
Some steel furnaces have tried to limit their environmental impact by recycling more scrap, switching to electric furnaces, or building gas and hydrogen facilities to phase out the use of highly polluting coal.
In Europe, in particular, large sums of money were planned to be invested in decarbonizing the sector.
But these investments have been put on hold due to Trump's looming threat of a trade war, the global surplus, and declining steel consumption on the continent.
im/sbk/rl
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