Impending US tariffs on Asian countries threaten demand for Chinese steel

China's steel market is likely to see its overseas demand running into headwinds if the US goes ahead with its reciprocal tariffs against certain countries, charging up to as high as 40% from Aug. 1, steel market participants told Platts, part of S&P Global Energy.

Some of these countries facing imminent US tariffs are also key trading partners of China.

As China's property sector has further undermined its domestic steel demand, exports of steel and steel-intensive manufactured goods will continue to be a crucial source of growth for China's steel demand.

If overseas demand slows down in the current situation, the Chinese steel market may face further downward pressure, said some of the sources.

US President Donald Trump sent letters to 15 countries, announcing that they will face tariffs in the range of 25%-40% from Aug. 1, unless they take in more US exports and boost manufacturing in the US.

China's steel exports to these 15 countries accounted for about 30% of the country's total steel exports over January-May, while the value of all Chinese commodities to these destinations accounted for 24% of the total exports, the latest data from China Customs showed.

Most of these 15 countries are in Asia, where their steel markets have already come under pressure due to sluggish demand and steel oversupply concerns.

Asian steel prices have been on a downtrend over the past two years. The Platts HRC SS400 CFR Southeast Asia assessment stood at $447/mt July 8, down 22.7% from Jan. 2, 2024.

The influx of Chinese steel to the Asian markets has already led to a surge in trade cases filed against Chinese steel products since around mid-2024.

Just within the first five months of 2025, five trade cases filed by Asian countries, primarily antidumping, led to import duties on certain Chinese steel products, affecting about 7.7 million mt/year of steel exports into these countries, data of S&P Global Trade Analytics Suite showed.

In addition, six more trade cases from Asian markets against Chinese steel are currently under investigation, potentially affecting 4.29 million mt/year of steel exports.

"Currently, China's overall steel exports have not yet been impacted in the Asian markets. However, if the US imposes higher tariffs on these Asian countries, leading to a decline in their domestic steel demand, their imports of Chinese steel will naturally decrease, and the antidumping measures against Chinese steel will also intensify," a trading source said.

Some other sources were also concerned that the US tariffs on the rest of the world could dent global economic growth, which would undermine overseas demand for Chinese steel-intensive manufactured goods in the near future.

Although the trade tensions between the US and China have been temporarily alleviated with a new trade framework agreement being reached on June 27, most market participants believed that the US trade policy towards China is unpredictable and it's still likely to see higher US tariffs imposed on China in the future.

In any case, China's exports of steel and manufactured goods in the second half of 2025 are unlikely to be as strong as it was during the March-June period, when overseas buyers were in a hurry to ship Chinese goods out before global trade tensions escalate further.