Winners and losers from Trump's tariffs on aluminium and steel

[LONDON] US President Donald Trump said he plans to impose 25 per cent tariffs on steel and 10 per cent on aluminium imports. If he gets his way, the policy could have sweeping ramifications across the globe. Here are some of the likely winners and losers.

WINNER: US STEELMAKERS

Producers such as Nucor Corp, AK Steel Holding Corp and US Steel Corp. will reap the benefits. They have aggressively lobbied for trade defenses against what they see as unfair competition from China, Russia and South Korea.

A tariff around the level currently discussed - 25 per cent on steel and 10 per cent on aluminium from all countries - is expected to drive up US steel prices. Domestic hot-rolled coil, an industry benchmark, has already rallied in anticipation, reaching about US$780 a metric ton, according to Metal Bulletin prices.

LOSER: US NEIGHBOURS

While China has long been the bogeyman of the steel industry and scorned by politicians for flooding the market with cheap products, it's not the biggest seller into the US. That title goes to Mexico, Canada and Brazil.

IT'S COMPLICATED: US FACTORY WORKERS

Republicans in steelmaking states like Pennsylvania, Indiana and Michigan will have a good message to take home in the 2018 midterms. Protecting blue-collar workers was one of Trump's key election promises, and this could be a success for the party, despite delays in their other legislative ambitions.

In the longer term, there could be mounting pressure for manufacturers who have to pay more for steel and aluminium. They employ more workers than steel and aluminium mills, and Anheuser-Busch InBev NV has already urged Trump to reconsider. The Budweiser brewer said higher US aluminium tariffs could cost thousands of U.S. jobs and raise costs by millions of dollars.

LOSER: ASIA STEELMAKERS

Shares of steelmakers JFE Holdings Inc and Kobe Steel Ltd are already showing signs of stress. The Bloomberg World Iron/Steel Index of 65 producers around the world is headed to a third straight loss.

LOSER: GLOBAL RELATIONSHIPS

Other countries are already talking about the possibility of retaliation. In China, one of President Xi Jinping's top economic advisers has been dispatched to the US in attempt to defuse tensions. China is investigating US imports of sorghum and studying whether to restrict shipments of US soybeans. The European Union has said it will take action if "unjustifiably hit" by the tariffs.

LOSER: SOUTH EAST ASIA

South East Asian markets probably will have to absorb the redirected steel flows. The global steel industry has been described as a game of whack-a-mole - when exports are blocked in one country, they end up shifting somewhere else.

One way this could play out: Asian companies that used to sell steel to the US could find their product uncompetitive because of the tariffs. So instead, they have to turn to other markets in the region to offload the product.

WINNER: ARCELORMITTAL

The steel-making giant is also a major producer in the US, and supplied building material for New York's One World Trade Center. It has long argued for trade defenses to protect its core markets, and tariffs would be a big positive.

But, depending on how the rules are applied, it may face higher costs. For example, it's unclear if ArcelorMittal's imports of steel slabs from Brazil to its plant in Alabama would be subject to tariffs.

LOSER: US ALUMINIUM USERS

For makers of beer cans, airplanes, cars and other materials the consequences of the tariffs "could be severe" as they face higher cost, with limited ability to pass that on to their consumers, Darwei Kung, the head commodities portfolio manager at Deutsche Asset Management. They also stand to lose market share as overseas suppliers bring into the U.S. their products at cheaper cost, he said.

For US auto dealers hit by flattening sales in recent months, the timing of metal tariffs couldn't be worse, according to Cody Lusk, president of the group that represents non-U.S. brand retailers.

Rio Tinto Group may join the losers' list unless Canada can wrangle an 11th hour exemption. The global mining giant is a major aluminium producer in Canada and ships metal to the US Hamilton-based steelmaker Stelco Holdings Inc. also serves customers in the US. Its shares fell as much as 6.1 per cent on Thursday.

BLOOMBERG