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Steel Tariffs from Trump to tighten metal supply from China

The steel and aluminium tariffs instated by President Trump should tighten the supply of metal coming from China. As a serial overproducer, cutback from China will be welcome news and could even increase prices; China is already trying to reduce capacity in steel and aluminium and this should push it further along.

But the danger is in how other countries respond. If a tit-for -tat trade war breaks out we could see international trade decline and it could be the beginning of downturn in economic prosperity for many countries.

China could cut its corn and soy imports from the US and drive a glut there. The EU is formulating a response as well. It comes at a time when US will be producing too much light oil for its domestic needs, while other countries could retaliate by reciprocal measures on US oil.

The impact on the price of commodities primarily depends on the global response, but it could weigh on prices.

Nitesh Shah , March 2018

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