HONG KONG, Mar 3 (AFP): Steel and aluminium producers across Asia sank Friday on news of Donald Trump's controversial tariffs, though some analysts said the long-term effects on the sector might not be as bad as thought.
The president said Thursday he would slap levies of 25 per cent on steel and 10 per cent on aluminum imports, delivering an election campaign promise to put "America First" and protect US jobs from what he claims are unfair trade practices.
The announcement has been met with fury across the world -- even from those in his own Republican Party -- with warnings it could spark a painful global trade war, sparking a sell-off on equity markets already on edge over fears of rising US interest rates.
Leading the selling Friday were firms that produce or use steel and aluminium.
In Seoul, South Korea's largest steelmaker POSCO tumbled 3.6 per cent, while Hyundai Steel slumped three per cent.
Tokyo-listed Nippon Steel and Sumitomo Metal dived 3.8 per cent, and its smaller rival JFE Holdings was down 2.8 per cent, with Rio Tinto in Sydney off 1.3 per cent.
Japanese car giant Toyota fell 2.4 per cent as it warned the car sector would be hurt and the measures would "substantially" increase the price of cars sold in America. Nissan fell 1.4 per cent and Honda shed 3.8 per cent.
"Traders are selling pinpointed steelmakers and automakers today in the wake of the remarks by Trump, at a time when sentiment has been hit by worries over US interest rates," Hikaru Sato, senior technical analyst at the investment strategy section at Daiwa Securities in Japan, told AFP.
And in Shanghai, Aluminium Corporation of China (Chalco) shed more than two per cent while Baoshan Iron and Steel dropped 3.9 per cent.
However, Sydney-listed Bluescope Steel, which exports steel to the United States and also has operations in America, was up 1.2 per cent. The firm has sought to be exempted from the tariffs and says its steel mill in Ohio state could benefit from the import crackdown.
Analysts said that while there were initial sharp losses in the sector following the announcement, the main fear was what it could mean in the future.
"We think overall, the danger is contagion -- the reaction -- rather than the actual tariffs themselves," Fat Prophets resources analyst David Lennox told AFP.
"We don't know the details yet and it'll be the reaction of the countries where the tariff will be applied. Where or how will those countries retaliate? Because it will happen and that's what people worry about.
"If the countries all stand back and take it on the chin, then that's the end of it. Poor old US will get dearer steel and it'll cost them more to build things."
And IBK Investment Securities analyst Han Yu-gun added: "This move will hurt US business firms more than South Koreans."
Another report from Brussels adds: The European Union (EU) is considering applying 25 per cent tariffs on around $3.5 billion of imports from the United States if President Donald Trump carries out his plan to apply global duties to steel and aluminum, EU sources say.
The European Commission has said it would respond"firmly" to proposed US import duties of 25 per cent on steel and 10 per cent on aluminum.
It has spelt out it would join others in a challenge at the World Trade Organisation (WTO) and consider safeguard measures, last deployed in 2002, to guard against steel and aluminum being diverted to Europe from elsewhere if US tariffs come in.
A further counter-measure under consideration would specifically target the United States to"rebalance" trade between the two, EU sources say.
The US tariffs would be officially brought in on grounds of national security, but the European Union says US military requirements represent no more than 3 per cent of US production and that the measures are really a form of protectionism for US manufacturers.
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