US Steel Tariffs and Chinese Oversupply Risk

NIPPON STEEL

Japan’s mills warn US steel tariffs and Chinese oversupply risk will worsen global imbalances. They expect weaker demand and thinner margins. As a result, US steel tariffs and Chinese oversupply risk could squeeze autos and machinery. Nippon Steel and JFE both flag profit and volume pressure. Therefore, US steel tariffs and Chinese oversupply risk now dominate boardroom planning.

Japan’s producers brace for weaker demand and profit hits

Nippon Steel projects a ¥50bn operating profit hit from tariffs and oversupply. The firm will cut crude steel output to 17mn t in April–September. It will also reduce export exposure to 40pc over six months. Meanwhile, JFE calls US tariffs the “biggest risk” to domestic demand. Both companies cite China’s slowdown and export push as key threats.

Autos and machinery face sharper headwinds under new trade frictions

Auto demand may weaken as tariffs raise costs and unsettle supply chains. Construction machinery demand could drop because 30pc of output ships to the US. High borrowing costs already depress equipment orders in Europe and Asia. Japanese service centers may delay restocking amid uncertainty. Inventory discipline will likely persist through fiscal 2025–26.

Global steel oversupply risk is rising as China redirects material. Tariffs could channel more Chinese exports into third markets. That shift pressures prices and spreads in Asia and the Middle East. Japan’s mills prepare for longer lead times on price recovery. Policy clarity and coordinated trade frameworks would stabilize flows sooner.

The Metalnomist Commentary

Japanese steel now faces a two-front challenge: a soft China and tariff reshuffles. Expect tighter product mix management and higher value-add focus to defend margins. Watch autos and yellow goods; any demand stabilization there could cap downside in H2.