How will US tariffs affect Vietnamese steel firms?

On February 11, the United States government announced a 25% tariff on all imported steel. This measure is intended to protect American steel manufacturers after three big mills in Pennsylvania were shut down in 2024. The profit margin of steel makers declined by 4% points yoy, hitting an average of 2.46% in Q4/24 due to a 32% yoy decrease in steel prices. Imported steel currently accounts for 51% of US demand, with the majority of that coming from HRC and CRC goods used in automated manufacturing. The levy is designed to help the country lessen its reliance on imported steel.

Vietnam (VN) was among the biggest steel exporters to the United States in 2024, alongside Canada, Brazil, Mexico, and South Korea. Since 2018, Vietnam has faced comparatively low tariffs ranging from 22% to 36% under Section 232 of the United States Trade Act. This percentage is lower than that imposed on other trading partners, who have tariffs that surpass 60%.

By the end of 2024, the United States had become Vietnam's third-largest steel export partner, accounting for 13% of overall exports (behind ASEAN and the EU). Steel export volume to the United States increased by 50% year on year, reaching 1.7 million tons, with important products being HDG, CRC, and HRC (60% of the total). The increase in HDG exports was fueled by favorable signals from the US building industry. According to the US Department of Commerce, total investment in the construction sector increased by 6.5% year over year.

In 2024, HRC and HDG accounted for 60% of total steel exports to the United States and were subject to tariffs ranging from 21% to 36 percent. Specifically, building steel and HRC faced tariffs ranging from 33% to 36%. According to Le Hai Thanh, an analyst at MBS, the present tariff rates on these products are already greater than 25%, therefore the US policy will have little impact.

However, Thanh believes that some HDG products are now subject to a 22% tariff, and that a rise in tax would have a detrimental impact on VN steel. As a result, corporations may cut their selling prices in the United States. We anticipate that identifying new exporters will take time due to the US market's reliance on imported steel (which accounts for 51% of overall consumption). Furthermore, Vietnamese enterprises would lower prices to keep market share, while their gross profit margins stay consistent at 8%-10%. As a result, export volumes are likely to stay stable, although profit margins may slightly decrease.

In terms of anti-dumping tax (AD tax), the United States Department of Commerce has launched an anti-dumping inquiry into CORE steel since Q3/2024, with a final decision likely in Q2/2025. However, this product is manufactured by CRC, which is not affiliated with any listed companies. As a result, Thanh determined that this levy would have no impact on the existing listed companies.

HPG's primary exports are HRC and building steel, which are subject to a 33% tax, accounting for 3% of total production. Thanh stated that HPG would be unaffected by this tariff decision because the current tax rate is already greater than 25%.

HSG exports HDG products to the USA at tariff rates ranging from 22% to 36%, depending on the steel product. Thanh estimated that HSG would need to reduce selling prices by 3% for products with a 22% tariff to maintain its market share. As a result, the company's profit margin may experience a slight decrease.

NKG exports to the United States with tariff rates ranging from 22% to 37%, depending on the steel quality. Thanh indicated that NKG will need to cut selling prices by 4% for certain products to maintain its market share. As a result, the company's profit margin may experience a minor decrease.

GDA exports to the United States with tariff rates ranging from 22% to 36%, depending on the steel grade. Thanh predicted that GDA will reduce selling prices for specific products by 3% in order to maintain its market dominance. As a result, the company's profit margin may experience a minor decrease.