The Steel Industry’s Search for Solutions Following Tariff Turmoil

Thai Nguyen Rolling Steel Plant in Steel Production

On April 2, US President Donald Trump signed an executive order imposing reciprocal tariffs on over 180 economies, with Vietnam facing a 46% rate. Notably, Vietnamese steel has been excluded and is already subject to a 25% tariff since 2018 under Section 232 of the US Trade Expansion Act.

The Trump administration aims to maintain stable tax policies on strategic metals, which are essential for key US industries. This decision avoids “double taxation” and keeps costs down for American consumers. However, it creates a complex scenario with both opportunities and challenges for Vietnam’s steel sector.

In 2024, Vietnam exported nearly 13 million tonnes of steel, worth 9.08 billion USD, according to the Vietnam Steel Association (VSA). The US was the third-largest market, accounting for 14% of total exports, after ASEAN and the EU. This highlights the significance of the US market for Vietnam’s steel industry.

While the US relies on imports for a portion of its steel demand, the impact of tariffs on Vietnam’s steel industry may not be detrimental if the potential of this market is wisely utilized. With countries like Canada, Mexico, and Brazil now facing the same 25% tariff, Vietnamese steel can maintain its price competitiveness in the US market, generating significant revenue.

Additionally, Vietnamese steel firms can pivot their focus to the domestic market, which is showing positive signs of recovery, or explore ASEAN markets with advantageous Free Trade Agreements (FTAs). However, caution is warranted as other nations may redirect cheap steel to Asia, increasing competitive pressure on local steel, which already faces oversupply issues.

There is also a risk of accusations of “disguising origin” for steel exported to the US, which could result in high countervailing tariffs. On April 4, the US Department of Commerce (DOC) announced preliminary results of an anti-dumping investigation on imported coated steel, with tariffs as high as 88.12% for Vietnamese steel. The industry must act quickly and effectively to counter these challenges.

It is crucial to accelerate investment in technology upgrades, reduce production costs, and enhance product quality and value. Export strategies need to be reviewed, and transparency in the supply chain and origin declarations must be strictly adhered to. Any accusations related to “disguising origin” could lead to new sanctions and damage the competitiveness of Vietnam’s steel industry.

At the same time, diversifying markets and leveraging FTAs to expand exports can help mitigate risks. The government should continue diplomatic dialogue with the US to minimize adverse policies and ensure effective solutions for maintaining access to their market. Protecting the domestic market from cheap imported steel and supporting businesses in trade defense investigations are also essential steps.

This is a critical juncture for the government and businesses to work together and secure the sustainable future of Vietnam’s steel industry, a key sector for the country’s economic growth.