The Trump administration’s tariffs on steel and timber are impacting far more on the US itself than the rest of the world.
While the looming threat of trade disputes – particularly in light of the policies and tariffs being implemented by the US administration under President Donald Trump – cannot be ignored, research is showing the impact to be quite limited on a global scale. According to Susan Oatway, senior analyst at Drewry Maritime Research, this is evident in analysis around both the steel and lumber trades.
Canada is the largest exporter of both commodities to the US. Trump, in an effort to support the domestic steel industry, earlier this year slapped a 25% tariff on steel imports. While trading partners took, quite predictively, a very hostile approach to the decision, the overall impact has been limited as the US only imports around 45 million tonnes of steel per year. “This only represents around 8% of the global steel trade.
The main losers in this tariff decision have in fact been the US ports – particularly those on the Gulf coast – as they will now miss out on the throughput they had been getting. But from a global perspective the impact is really going to be very minor,” she said. According to Drewry Canada is the largest steel exporter to the US, followed by Russia, Brazil, the EU and Mexico. Canada and Mexico have already secured exemptions on tariffs, but with a warning that their exemptions could be withdrawn if they tranship foreign steel into the US while passing it off as their own.
The goal of the US government is to stop the slide in domestic steel production. Before the financial crisis of 2009 the country was producing around 100 million tonnes of steel every year. In 2015, it produced less than 80 million tonnes. With the new tariffs Washington is attempting to reduce steel imports by some 13 million tonnes so that their domestic mills produce more.
More recently Drewry looked at the lumber industry where Trump introduced a 20% tariff on imports. With every third new house in the US being built with Canadian lumber, this particular trade spat would again impact on Americans far more than the rest of the world, said Oatway.
It is estimated the US currently imports about $5.66 billion worth of softwood lumber from Canada every year – an essential input for the American construction and home repair industries.
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US ports, particularly on the Gulf coast, will miss out on the throughput they have been getting. – Susan Oatway
