S.M. Lodha is an industrialist with interests in iron and steel, and Chairman of specialist thermal engineer companies Western Thermal Group. Here, he gives his opinion on the news that the Steel producers hit by tariffs could adapt to the trade dispute.
The news that the US has imposed a further $16 billion in tariffs on Chinese goods will unsettle businesses across the world as the trade conflict escalates further. Although this is set to hurt Chinese exporters particularly within the steel industry, there could be opportunities despite the tariffs.
Look to the EU, where tariffs have also been imposed. European steel producers are expected to take an earnings hit, a further development following the 25% trade tariffs imposed on steel imports earlier this year by the US, with further declines from the 7.5% drop in shipments expected to follow.
However, in light of these predictions, with the strong demand of coil steel futures increasing to highs not surpassed in decades, European steelmakers have identified a means of selling into the US despite the tariffs.
This demonstrates how the UK can actually benefit from the imposed tariffs with the UK industry sector remaining positive regarding the rate of new order growth and positivity towards job creation expansion.
However, with investors being hesitant to bid up stocks based on concerns that the global trade rift will be so extensive that growth and demand will be damaged, there may be temporary constraints against output but this shouldn’t affect production capacities in the long run.