International capital markets have been roiled as President Trump announced that he intends to apply 25% tariffs on all imports of steel into the US and 10% on aluminium, as this will, in his opinion, protect the US domestic steel industry.
Logically, investors react by trying to identify which countries stand to lose the most from this move.
It might be expected that China is candidate number one, since it has been persistently named by the US aluminium and steel industries as the source of what they claim to be unfair competition. As can be seen from the below graph, showing steel imports in 2017, China is only the eleventh biggest source of imports, with a volume about 13% of Canada’s.
However, emerging market countries appear to be big exporters of steel to the US, accounting for 7 of the top 10 exporters. So who gets hurt?
The best way to answer that is to look at which countries are most dependent on their steel exports to the US:
The most exposed on this measure is South Korea, whose exports of steel to the US last year accounted for 0.18% of GDP. The next most affected are Turkey and Brazil, (0.13% of GDP), followed by Russia (0.11% of GDP).
The negative reaction from investors was not strictly triggered by these very low numbers, but rather because of the signal – that the inevitable reaction was going to lead to an all-out trade war, which would be undoubtedly bad for everyone. However, if this does play out, it will only serve to accelerate the growth of intra- EM country trade, to the exclusion of the US.
There is a precedent for this, when President George W. Bush applied tariffs to the steel imports in 2002, only to take them off again after losing the case at the WTO . He exempted Canada and Mexico, the NAFTA partners. In that case, according to a study  by CITAC  found that 200,000 Americans lost their jobs to higher steel prices in 2002; this number exceeds the total number employed by the US steel industry itself in December 2002 (187,500).
 WTO – World Trade Organisation
 CITAC - Consuming Industries Trade Action Coalition