According to a report by Reuters, the new US 25 percent tariff on steel imports poses a risk to the supply chain transporting steel from China to the US through third countries, intensifying global competition and hitting Chinese steel sales worth approximately $7 billion. The measures in 2016 and 2018 led Chinese steel to become too expensive in the US, prompting third countries to purchase Chinese steel at a lower price, process it and resell it to the US.
As the new tariff will add pressure on China’s steel exports indirectly, some Chinese companies will face lower profitability in already struggling steel market conditions. According to a source speaking to Reuters, the export orders that Chinese companies have received for March and April shipments have decreased by 20-30 percent year on year. Besides, the competition in other markets, those not facing any major trade measures on Chinese steel such as the Middle East, is anticipated to intensify with more Chinese steel flooding them.