In March, Trump announced tariffs on steel and aluminum imports into the US and now financial markets globally have been shaken with the prospect of trade war. While “friendly” nations like Canada are exempt, the rest of the world, both big and small, has been impacted. Since many frontier markets are overly reliant on natural resource exports, a future trade war has an increased impact on them, especially since they are unlikely to be large enough to be singled out for exemptions.
Which Countries Are Impacted The Most From Trump Tariffs?
We took a look at which countries were most reliant on their steel (iron) and aluminum exports. While countries like China and Russia are among the largest exporters of steel and aluminum and were the main target for tariffs, they also have more diversified economies that are not reliant on just those exports. For example, despite being the biggest producer of aluminum in the world, China’s aluminum-related exports make up less than 1% of its total exports. Meanwhile, aluminum and iron exports in Bahrain, which is a top 10 producer of Aluminum despite its smaller size, make up almost 19% of its total exports.
Using 2016 export data from MIT’s Observatory of Economic Complexity, we found the countries where iron and aluminum exports made up the greatest proportion of that country’s total exports. These are all the countries where aluminum and iron related exports accounted for over 5% of the country’s total exports:
|Country||Aluminum & Iron Exports|
Specifically, we included:
- Iron Ore
- All Iron Products (Sheets, Scrap, Pipes, Pipe Fittings, Railway Products, Structures, etc.)
- Raw Aluminum
- All Aluminum Products (Wire, Plating, Bars, Foil, Housewares, etc.)
We did not include more finished products such as automobiles that will be impacted by these tariffs indirectly.
Iceland: The Surprise Aluminum Leader of the World
Iceland, the small island nation of 350,000 people, is the number one country on our list of economies most reliant on aluminum and iron exports. Raw aluminum and aluminum products make up about 36% of their total exports. The local market has grown as a result of plentiful cheap electricity to power aluminum smelters.
Fortunately for Iceland the Trump tariffs currently exempt the European Union, and while Iceland is not a full member of the EU, their aluminum smelters are owned by American companies (Aloca and Century Aluminum), so there is sure to be a resolution in place to exempt them. More information can be found in this article here.
Other countries on our list but are currently exempted include Australia and Brazil.
The Middle East and Africa are the Main Unintentional Targets of Tariffs
Bahrain is the main loser of the new tariffs. With iron and aluminum exports adding up to just under 19% of their total country’s exports, they also send about 11% of their exports to the US.
The Middle East and Africa in general are collateral damage in the first salvos of a potential trade war between China and the US.