The President of the United States Donald Trump has used a 1962 law to sign an executive order to launch an investigation with gives the department of commerce to assess, whether importing steel, which has both civilian and military applications threaten national security or not. Mr. Trump said that it is a historic day for American Steel but he insisted that the executive order is not aimed at China, which is the largest global producer and importer of steel. Mr. Trump said, “Steel is critical to both our economy and our military. This is not an area where we can afford to become dependent on foreign countries.”
President Trump’s commerce secretary Wilbur Ross said that the investigation can be completed well before the timeline of 270 days. Mr. Ross said the administration was concerned that rising steel imports were threatening US industry and its ability to respond quickly to national security needs.
This new executive order is of utmost importance for foreign steel companies as the Trump administration plans to reveal its trillion dollar infrastructure plans.
While the executive order opens the path to measures against foreign steel imports, it is not likely to change the net demand immediately. However, the order is still not a good one for Iron ore, which is the most important steel making ingredient. China is the biggest producer of steel and the biggest consumer or iron ore. The order will eventually lead to slower exports for Chinese steel, which has a market share of almost 26 percent in the US import market. The ripple effects in the Chinese economy would eventually lead to the lower domestic demand of steel.
The price of Iron ore has declined more than 20 percent since March and is currently trading at $70.9 per ton. It is likely to slide down further.