US steel and aluminum derivative tariffs to be upgraded by 50% take effect today, global supply chain may see a new wave of turmoil

Today (June 23), the United States officially doubled the import tariffs on steel and aluminum derivatives applicable under Section 232 from 25% to 50%, covering related home appliances, machinery and building materials. This measure originated from the presidential proclamation issued on June 3, and the internal detailed definition and classification update was completed at the beginning of this month.

In addition to traditional plates and raw materials, the expanded tariff scope also excludes 11 steel and aluminum derivatives including refrigerators, washing machines, dryers, dishwashers and stoves. When calculating tariffs, only the steel and aluminum content is calculated, not the overall value of the goods, and a 10% IEEPA surcharge is imposed on "non-metallic components".

The US move triggered a backlash from allies such as Canada and the European Union. Canada has responded that it may impose tariffs on similar US products, and the two sides have also started a 30-day negotiation schedule. The European Union and Australia also strongly criticized that this move will make the global steel and aluminum supply chain more chaotic.

The industry expects that downstream industries in the United States, such as automobiles, home appliances, building materials and construction machinery, will face significant cost pressures. BCG estimates that it may increase client costs for the manufacturing industry by more than US$50 billion. The possibility of US companies following or shifting their supply chains to Mexico, India and other places also increases.

What should investors pay attention to?

• Import and export companies or the ability to pass on cost structures

If cost transfer is limited, it may hit the profits of related industries hard, and stocks and bonds need to be carefully selected.

• Supply chain restructuring dynamics

Supply chain countries that move to lower-cost regions will be beneficiaries, such as Mexico, India and certain Eastern European countries.

• International retaliation and trade negotiation progress

Only if Canada and the EU formally fight back or reach a compromise can this wave of impact be alleviated.

• Impact of commodity prices and US inflation data

Cost-driven prices will also affect the FED's stance, and it is recommended to regularly observe the performance of PPI and CPI.