Taipei, The local steel sector extended its losses from the previous session on Monday morning amid concerns after U.S. President Donald Trump announced last week that Washington will impose tariffs on steel and aluminum imports, dealers said.
Such fears have been heightened by White House trade adviser Peter Navarro, who told the U.S. media that the president has no plan to exempt any countries from the tariffs which are expected to be implemented this week at the earliest, they said.
As of 11:53 a.m., the steel sub-index on the Taiwan Stock Exchange had fallen 1.99 percent after a 1.63 percent decline on Friday as fears resulting from the proposed U.S. tariffs continued to move market sentiment.
The selling of local steel stocks ensured the sector lagged the broader market, with the weighted index on the main board down 0.26 percent at 10,670.04 points on turnover of NT$77.69 billion (US$2.65 billion).
"It seems a trade war in the global market is imminent as some of Washington's major trading partners have threatened retaliation against Trump's new tariffs on imported steel and aluminum," Hua Nan Securities analyst Henry Miao said, referring to U.S. trading partners such as the European Union, which has threatened to impose tariffs on Levis and other U.S. brands in response.
Under Trump's plan, tariffs on steel imports will hit 25 percent and those on aluminum imports reach 10 percent.
"Such a development is negative to global trade. Taiwan, an export-oriented economy is likely to feel the pinch if things really go bad," Miao said.
For steel firms themselves, Miao said, the impact will be direct. "In particular, Trump has no plan to exempt any importing countries from the new tariffs. So, even before the tariffs are implemented, investors are fleeing the steel sector for the moment."
Among the falling steel stocks, Chung Hung Steel Corp. had lost 8.46 percent at NT$12.40 and Sheng Yu Steel Co. had fallen 3.02 percent to NT$27.25 as of 11:53 a.m. because the U.S. is their main flat steel sheet market. Shares in China Steel Corp., the largest steel maker in Taiwan, also fell 1.46 percent to NT$23.40.
According to U.S. Customs data, Taiwan's steel product exports to the U.S. totaled US$3.62 billion in 2017, accounting for 5.61 percent of total U.S. imports, while Taiwan's aluminum product exports to the U.S. totaled US$57.12 million, or 0.33 percent of U.S. imports.
John Deng (???), Taiwan's top trade negotiator, said Sunday that Taipei will try first to hold discussions with Washington on Trump's proposal to impose tariffs on steel and aluminum imports, before considering other action if necessary
Wu Tsai-yi (???), president of the Taiwan Research Institute, said that if Taiwan is affected by the new tariffs, Taiwanese companies should find alternative markets to the U.S. as soon as possible to reduce the impact of the tariffs.
As for the broader market, Miao said investors remain cautious amid lingering concerns over possible volatility on Wall Street, which is expected to dictate foreign fund flows.
Source: Focus Taiwan News Channel