When the US Department of Commerce announced the imposition of a 50% tariff on over 400 types of steel and aluminum derivatives, this seemingly “protecting domestic industries” policy operation actually opened Pandora’s box for the restructuring of the global industrial chain. From cheers at Cleveland Cliffs Steel Plant to anxiety in Tesla’s supply chain department, from protests in Brussels to calm observations in Beijing, a global game around steel and aluminum is unfolding.
Policy Logic: Precise Strike and Self harm of Industrial Protectionism
The recent tariff expansion by the United States can be regarded as a “targeted treatment” – bringing strategic emerging industries such as wind power equipment and new energy vehicle components into the range, not only blocking the loophole of “avoiding tariffs through derivatives”, but also accurately targeting foreign competitors. The statement by Deputy Minister of Commerce Jeffrey Kessler exposed the core of the policy: to force the manufacturing industry to return by increasing import costs and reshape the US hegemony in the field of high-end metal processing. However, this strategy of “exchanging tariffs for production capacity” is facing a dilemma:
Upstream conflict: According to data from the American Iron and Steel Institute, its domestic high-purity electrical steel production capacity can only meet 60% of Tesla’s demand. Although a 50% tariff can block imports, it may cause local production to stagnate due to raw material shortages.
Downstream backlash: General Motors estimates that tariffs will increase the cost of each electric vehicle by $320, which directly conflicts with the Biden administration’s goal of transitioning to new energy.
Industrial chain oscillation: butterfly effect from mines to 4S stores
This tariff storm is reshaping the nerve endings of the global steel and aluminum industry chain:
• Mining end: Rio Tinto Group in Australia has adjusted its iron ore shipping plan, prioritizing European customers and expanding the global sea freight iron ore price difference to $15/ton.
Smelting end: Chinese aluminum giants have begun exploring the construction of overseas processing bases in Southeast Asia to avoid the tariff trap of “exporting primary aluminum and importing derivative products”.
Manufacturing end: Siemens Energy announced the suspension of bidding for US wind power projects and instead seeks to establish a strategic alliance with Brazilian steel companies.
On the consumer side: American consumers may face a “double blow” – both bearing the cost of rising car prices caused by tariffs and facing delivery delays due to insufficient domestic production capacity.
The way to break through: finding a new balance in the tide of anti globalization
Faced with tariff barriers, all parties in the industrial chain need to build a “triple defense system”:
1. Technological Breakthrough: Dimension Reduction Strike of Material Revolution
The breakthrough in the research and development of graphene aluminum based composite materials may cause traditional steel aluminum materials to lose their advantage in the field of lightweighting. Chinese research teams have achieved a 40% reduction in mass production costs for this material.
The commercial application of hydrogen metallurgy technology will change the carbon emission pattern of steel production. The Swedish HYBRIT project has achieved zero carbon steel production, which may reshape global trade rules.
2. Geographic reconstruction: the “decentralized” revolution of supply chain
Mexico has become the biggest beneficiary, as its geographical proximity to the United States combined with the USMCA agreement is attracting global steel companies to establish “nearshore processing” bases.
Vietnam’s steel exports have surged by 27% year-on-year, and its “raw material import rough processing export” model is forming a new space for tariff arbitrage.
3. Rule Game: The “New Trade Language” Outside the WTO Framework
The EU is pushing for the establishment of a ‘critical raw materials alliance’ to counter US tariff policies through strategic reserves and joint procurement.
The “Global Industrial Chain Security Initiative” proposed by China advocates the establishment of a tariff exemption list and dispute resolution mechanism, which has received responses from more than 30 countries.
Market Observation: Investment Opportunities in Crisis
In this industrial chain restructuring, smart capital is seeking opportunities in the “policy gaps”:
Mining stocks: Mining companies with overseas resource layouts will face a value reassessment, with Zijin Mining’s overseas mining profits accounting for 65%.
Equipment manufacturers: The demand for technological upgrades under the pressure of tariffs will drive the demand for high-end rolling equipment, with orders related to China National Heavy Duty Truck Group increasing by 38% year-on-year.
Logistics provider: The demand for cross-border supply chain services has surged, and the volume of major cargo transportation business of COSCO Shipping has doubled year-on-year.
When Trump swings his tariff stick again, what we see is not only a resurgence of trade protectionism, but also an accelerating key to the restructuring of the global industrial chain. In this war without gunpowder, only those enterprises that can find a new balance in technological innovation, geographical layout, and rule games can become the ultimate survivors. For investors, staying clear headed in chaos and seizing opportunities in crisis may be the best strategy to deal with this steel and aluminum storm.
Post time: Aug-21-2025