It may take some time to see what impact the steel and aluminium import tariffs proposed for the United States by Donald Trump will have on New Zealand industry.
Trump’s call for a 25% steel tariff and 15% on aluminium has seen a negative global reaction with countries like China which reportedly sends $US500 billion worth of steel to the US, threatening counter sections.
There have been reports Trump would want to escalate trade issues with China to take in breaches of intellectual property rights.
Key members of the Republican Party have reservations about the tariffs, believing they could start a trade war the US does not need. This has many industry groups hoping the Trump measures fail to become legislation.
The measures have been roundly criticised in Australia with BHP saying it could start a trade war and also see many jobs lost in Australian industry.
When the announcement was made BlueScope Steel Ltd (ASX: BSL) – Australia’s biggest steel producer – saw almost a dollar removed from its share price and the closing price last night of $A15.84 was still behind its price of the previous day.
The Australian newspaper said the concept that the trade barrier may be good for BlueScope had not been shown in the share price.
It was pointed out that BlueScope may in fact benefit from the tariff because it owns the big Ohio steel mill in the US.
Yesterday The Australian said under the steel tariffs BlueScope’s Ohio mill could boost earnings by $US150 M a year which would be greater than the entire value of Australian steel exports to the US.
To yesterday there was no official comment made by BlueScope which is apparently concerned about the impact it would have on the big Port Kembla operations in New South Wales.
Then there is BlueScope’s fully-owned New Zealand steel operation on the North Island, though domestic markets and Asia were seen as greater markets than the US.
Sky News Business yesterday debated the earlier claimed undertaking by Trump to Australian Prime Minister Malcolm Turnbull that Australia would be exempt from the tariffs, but US Government officials said after Trump’s announcement that this would not be so.
However, late yesterday there was business reports out of the US saying Trump may consider some modified position for Canadian and Mexican steel and aluminium.
It may be that the Trump move may have a greater reverberation for New Zealand on aluminium exports, because the country’s sole smelter is controlled by Rio Tinto which is apparently upset by the measures.
Rio owns Pacific Aluminium, including control of the Tiwai Point smelter. One of the problems for Rio Tinto is that it has some of the Pacific Aluminium and other global aluminium interests on the market again, and a trade barrier could be a hurdle for a good sale price.
Sources: theaustralian.com.au; skynews.com.au