Issue 14, 2025 - This week's editorial: Trade war floors global sentiment, China eyes VAT crackdown 

The global trade war moved up a gear last week as the US 25% tariff on car imports went into effect and President Donald Trump unveiled his long-awaited “reciprocal” tariff plan, which however exempted steel. China duly responded, promising to impose additional tariffs on US-origin goods. Global financial markets subsequently plummeted, while Trump hit the golf course. The European coil market leader nevertheless used the post-safeguard adjustment climate to raise its HRC quote to €700/tonne ($765), but sources reported the higher pricing would make imports more viable. China was meanwhile said to be cracking down on VAT-evading steel exports, suggesting the disappearance soon of ultra low-priced Chinese export quotes. 

The US imposed from 5 April a new global 10% tariff on all US imports, which is superseded by customised reciprocal tariffs in the case of some countries, effective 9 April. Vietnam, for example, was assigned a 46% tariff, China 34% – to go on top of the earlier 20% tariffs imposed on China – and the EU 20%. Trump claimed the move would catalyse a renaissance in US manufacturing. Steel imports are exempt from the new tariffs, but are still levied with the earlier implemented 25% tariff. 

China retaliated with an additional 34% tariff to be applied to all imports originating from the US, effective 10 April. The move may have a substantial impact on bilateral trade in steel-related goods, including ferrous scrap, specialty machinery, and high-grade steel products. 

Sporadic Chinese Customs investigations and debt collection on non-VAT exports were meanwhile quietly reshaping the export market. With the announcement of an electronic export goods declaration system and multi-department joint management, the market expects that this form of export will almost disappear from May onwards. The practice of VAT-evading exports intensified last year, seeing China export its second-highest annual steel tonnage in history. 

News of the VAT-evading export crackdown immediately caused Chinese wire rod export prices in ASEAN to rise. Quotes for mesh-grade 6.5mm and up diameter Chinese Q195 grade wire rod jumped to around $490/t cfr Manila versus $470-475/t a week earlier. 

New, higher EU coil prices are due to take effect for new deliveries in June. The tighter safeguard measures imposed by the EU are prompting customers to seek domestic sourcing of material within Europe, some sources observed. Coupled with a slight demand improvement, this has encouraged EU mills to lift quotes again. However, given transaction values have been lagging behind mill offers ever since the hike cycle began last October, it remains to be seen how receptive buyers are to the new values. 

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