LONDON, Oct. 22, 2019 /PRNewswire/ -- In response to events in Syria, US President Donald Trump has announced that the US tariffs on Turkish steel imports will be restored to 50%, after they had been revised down to 25% in May. What are the likely impacts of this decision?
Turkish exports remained subdued despite tariff rollback
In August 2018, the US President uniquely increased the Section 232 steel tariffs on Turkey from 25% to 50%. When placed on uneven footing with other international sellers, Turkish mills were uncompetitive in the US, and total monthly US steel imports from the country dropped almost 80% between the periods March 2018–August 2018 and August 2018–May 2019.
Despite this tariff being reverted to 25% in May, Turkish export activity to the US has not recovered since.
This lack of recovery is because the key factor in the competitiveness of Turkish steel has been its scrap costs. In September, the Turkish scrap price reached levels that would allow for rebar to be offered at prices both attractive to US buyers and profitable for Turkish sellers – though US consumers largely steered clear from Turkish material as they were concerned about possible US-Turkey trade actions – concerns now shown to be well-grounded.
Look beyond the headlines – the tariffs are not the story
As monthly Turkish exports to the US have remained near zero for the last year, this reversion to a 50% tariff will only perpetuate the absence of Turkish mills from the US market rather than cause any noticeable changes. It does, however, quash any opportunities that may have been afforded to Turkish exporters as a result of the recent falls in scrap prices.
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