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The self-proclaimed “Tariff Man” has announced a 25% tariff on all steel and aluminium imports – an order set to shake up global trade. The key question is which countries will bear the most brunt, after the US itself?
Lower export demand reduces the demand for a currency, which affects its exchange rate. This means that for countries that export to the US, the FX rates for their currency versus the US dollar may be lower.
Additionally, exporters will lower their production, which impacts the sector’s employment capacity. Steel, aluminium and derivatives industries in countries exporting to the US may affect unemployment as they cut jobs to balance capital inflows.
Since exports are a key component of aggregate demand and a country’s GDP, both are affected by a decline in foreign demand.
| Country | Import Amount | Impact |
| Canada | $25.26 billion | Significant impact on GDP |
| China | $13.86 billion | Intensified efforts to diversify exports |
| Mexico | $13.28 billion | May impact the manufacturing industry |
| South Korea | $5.71 billion | Auto makers could hike prices or lower production |
| Brazil | $4.87 billion | Could cripple the economy with a strong impact on the mining and manufacturing sectors |
| Germany | $4.49 billion | Slowdown in growth in the auto and engineering industries |
| Taiwan | $4.38 billion | May have to look for trade diversification opportunities |
| India | $4 billion | Manufacturers will be forced to look for alternative markets |
| Japan | $3.22 billion | Impact flows of high-tech automotive and electronics |
| Italy | $2.73 billion | Stress the struggling Italian economy |
The import duty will add $22.4 billion to the cost of steel and aluminium imports and $29 billion to derivative product imports to the US. Industries, such as metals manufacturing, construction, automotive, mechanical machinery and consumer goods, are expected to be deeply impacted. The move may drive steel and aluminium product prices higher in the US, pressuring the profit margins for manufacturers. This, combined with retaliatory tariffs, can potentially increase the core personal consumption expenditure (PCE) price index by 0.4 percentage points, further fuelling the already sticky inflation, which may put the greenback under pressure.
US president Donald Trump’s “America First” stance may translate into the country bearing the most brunt of tariffs. Import tariffs translate into higher costs for domestic consumers, which fuels inflation.
About 20% of steel and 50% of aluminium comes to the US from Canada. For Canada, these account for 3% of its exports and about 0.5% of its GDP. Canada, which has reiterated that retaliatory tariffs will be imposed, imports only 3% of the total consumption of manufactured steel and aluminium products. This is unlikely to have an economic impact more significant than the sweeping 10% tariff. However, the impact could be disproportionately evident in southwestern Ontario and Quebec, which rely on the export of manufactured auto parts to the US.
China is at an overcapacity when it comes to steel production. The country has practically flooded the global markets with cheap and subsidised exports. The red dragon’s subsidies are over 10x higher than that of OECD nations and 5x higher than non-OECD ones. The US only accounts for 2% of Chinese steel and aluminium exports.
The White House claims it will address the overproduction problem that distorts the global markets. However, the tariff is set to isolate the US, while the world remains China’s dumping grounds for metal products. Unfortunately, the greater availability of Chinese exports in the global markets may squeeze the demand from the US producers. This could also translate into an opportunity for China to tighten trade ties with new markets with relatively cheaper goods.
The tariffs will impact 1% of Mexico’s total exports and 0.26% of its GDP. The country’s Primary Metal Manufacturing and Fabricated Metal Product Manufacturing sectors’ production is set to be impacted. This may lead to the underutilisation of production plants and weigh on the industry’s growth. Notably, the two sectors employ 9.7% of manufacturing workers and the employment in these two sectors has been contracting since 2024. The biggest suspicion the US has is that Mexico exports goods imported from China, which America has indirectly pointed out on several occasions.
South Korea had a trade surplus worth $55.7 billion with the US in 2024, riding on the semiconductor and automobile sectors. The country’s analysts speculated that 10%-20% tariffs could cut US exports by 14%, slowing South Korea’s GDP growth by 0.2 percentage points. The tariffs may also impact oil and fuel inflation in the country. Notably, steel and aluminium exports account for only 1% of the country’s total GDP. However, possible import duties on semiconductor products and cars may hurt the South Korean economy more.
The country’s top analysts lowered their GDP growth forecast from 2% to 1.6% for 2025 due to concerns regarding global trade affairs. South Korea may strike a shipbuilding deal with the US and plan to diversify into other markets. While the government is keeping a close eye on other nations’ activities against the tariffs, a retaliatory tariff may work against South Korea’s interests.
When the markets are extremely volatile, trading via derivative instruments, such as contacts for difference (CFDs) is a popular choice. This is because CFDs allow traders to gain exposure to both falling and rising prices. Plus, CFDs can be traded on margin, which amplifies traders’ purchasing power. However, this also increases potential profits and losses, which necessitates risk management.
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