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U.S. increases tariffs on imported steel from China, creating opportunities for Vietnamese steel industry

U.S. increases tariffs on imported steel from China, creating opportunities for Vietnamese steel industry

Steel NewsDate: 11-07-2024 by: Ngoc Cam

On May 14, 2024, U.S. President Joe Biden announced an increase in tariffs on $18 billion worth of imports from China, including electric vehicles (EVs), solar panels, semiconductors, iron and steel, in a bid to protect American industries. 

The tariff increase is expected to significantly impact Chinese exporters, prompting U.S. importers to look for cheaper alternative sources, such as Vietnam.

New US tariffs on Chinese imports open doors for Vietnam's booming export market
New US tariffs on Chinese imports open doors for Vietnam's booming export market

On May 22, 2024, the US Trade Representative (USTR) announced proposed amendments to tariffs on Chinese imports, effective from August 1, 2024.

Import

Current rate

New rate

Electric vehicles (EVs)

25%

100%

Semiconductors

25%

50%

Solar cells

25%

50%

Syringes and needles

0%

50%

Some steel and aluminium products*†

7.50%

25%

Lithium-ion EV batteries

7.50%

25%

Lithium-ion non-EV batteries*

7.50%

25%

Battery parts*

7.50%

25%

Some personal protective equipment (PPE)*†

7.50%

25%

Rubber medical and surgical gloves*

7.50%

25%

Natural graphite and permanent magnets

0%

25%

Other critical minerals

0%

25%

Ship-to-shore cranes

0%

25%

The US has imposed additional Section 301 tariffs on these products, including steel and aluminum products, electric vehicles, batteries and semiconductors. These products will face significant tax increases, such as for electric vehicles, quadrupling from 25% to 100%. Other categories such as steel and aluminum products were previously not subject to tax or only 7.5% but will soon be subject to import tax of up to 25%.

US proposes steep tariff hikes on Chinese imports, effective August 1, 2024
US proposes steep tariff hikes on Chinese imports, effective August 1, 2024

Thus, China is currently subject to both Section 232 and Section 301 tariffs. This means that steel exports from China to the US are subject to a tax rate of up to 50%. Meanwhile, steel from Vietnam is only subject to a 25% tax rate under Section 232. This difference creates a clear competitive advantage for the Vietnamese steel industry in the US market.

In response to the increased tariffs on Chinese steel, U.S. steel importers are actively looking for alternative sources of supply and Vietnam has emerged as an ideal choice with many of the following advantages:

High-quality products

Vietnamese steel is produced according to international standards ASTM, EN, JIS,..., achieving certifications for quality and environmental management systems such as ISO 9001, ISO 14001, OHSAS 18001,... These certifications not only confirm product quality but also ensure a safe and environmentally friendly production process.

Large steel mills in Vietnam such as Hoa Phat, Hoa Sen, Formosa,... use modern production lines and advanced technology from the world's leading metallurgical brands like Danieli, Tenova, ... Currently, Vietnam has become self-sufficient in raw material input (HRC), so 100% of products can prove their origin, meet strict international standards, ensuring reliability and stability for construction and industrial projects in the US.

Vietnamese steel ensures high quality and reliability for US construction and industrial projects
Vietnamese steel ensures high quality and reliability for US construction and industrial projects

Competitive price

With a 25% tariff under Section 232, Vietnamese steel has a more competitive price than Chinese steel in the current context. This is also the reason why more and more American importers are contacting and looking for Vietnamese steel sources to optimize costs.

Favorable geographical location

Vietnam is strategically located in Asia, near the world's  major maritime routes, including routes connecting Southeast Asia with North America and Europe. This helps reduce transportation costs and delivery times, a crucial factor in maintaining a stable supply chain.

The shipping time from Vietnam to major U.S. ports like Los Angeles, Long Beach, New York, Savannah,... only takes about 30-45 days depending on the specific conditions and schedule of each shipment.

Compared to other countries in the region, transit time from Vietnam to the US is equivalent or even shorter due to the development of direct maritime routes and modern port infrastructure in Vietnam. This helps optimize the supply chain and ensure stable supply for U.S. importers.

Vietnam's strategic location and efficient maritime routes ensure faster and cost-effective delivery to major US ports
Vietnam's strategic location and efficient maritime routes ensure faster and cost-effective delivery to major US ports

Stable supply

Vietnam has many modern steel plants, ensuring continuous supply capability and meeting large demands from international partners. According to the Vietnam Steel Association (VSA), Vietnamese crude steel output in 2023 reached about 24 million tons, up 8% compared to 2022. Construction steel output reached 11 million tons, up 9% over the previous year. It is forecasted that in 2024, finished steel production could reach 29 million tons, a 6.7% increase compared to 2023. In the first three months of 2024, Vietnam's steel exports reached 3.23 million tons, valued at $2.39 billion, a 40.6% increase in volume and 38.9% increase in value compared to the same period in 2023, with major export markets including the U.S., Italy, and Cambodia.

The increase in tariffs on Chinese steel not only impacts trade relations between the US and China but also creates significant changes in the global steel market, opening up opportunities for steel manufacturers in other countries, especially Vietnam. Currently, Vietnam is one of the world's largest steel producers with crude steel output ranking 12th globally. In particular, MRS Steel has many years of experience in exporting steel to the US, knowledgeable about products, markets, tariff policies, logistics,... helping importers significantly optimize the time and effort of purchasing Vietnamese steel. Contact MRS Steel via Email: vanloc@mrssteel.com.vn or Whatsapp: +84 769 112 358 to receive detailed advice from our team of experts!

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