Little impact on Asia seen in Trump’s tariffs

Based on the size of aluminum and steel exports to the US - in relation to each exporting economy's GDP and total exports - Canada and Bahrain would be most exposed directly, Moody's said in a report. 
“In Asia, the direct economic effects at the macro level would be very small as exports of aluminum and steel to the US typically amount to less than 1 per cent of GDP or exports,” said Marie Diron, managing director, Moody's Investors Service.
“At this stage, we do not see any significant impact on the credit profiles of sovereigns,” she added.
Trump suddenly announced the tariffs on Thursday, saying American steel and aluminium industries had been treated unfairly by other countries for decades. He said he would sign off on the tariffs - 25 per cent on steel and 10 per cent on aluminium - next week.
The news rattled stock markets and sparked threats of retaliatory measures from exporting nations and fears of a resulting trade war, with a tumble on Wall Street extending to Asia.
Longer term, tariffs on steel and aluminum could signal a marked deterioration in global trade relations to the extent that they are followed by other measures from the US and potential responses from other countries, said Moody's.
“While not our baseline scenario, Asia as a trade-reliant region would be vulnerable to a marked slowdown in global trade,” said Diron.
Moody's also said the US plan to impose tariffs on steel imports is credit negative for Moody's-rated Asian steel producers, but the impact will not prove material.
“The impact of the tariff would be manageable for the Asian steel sector and Moody's-rated steelmakers in the region, because exports to the United States  account for relatively small portions of their total steel production,” said Moody's analyst Sean Hwang.
Moody's pointed out that China's direct steel exports to the US represented only one per cent of its total exports or 0.1 per cent of total steel production during the first nine months of 2017. 
In addition, the reliance by Chinese steel companies on exports decreased substantially in 2017, it said.
In contrast, the Korean steel sector demonstrates a relatively high exposure to US exports, given its position as the third largest |steel exporting country to the |US during the first nine months |of 2017, said Moody's.
Nevertheless, even in the case of Korea, steel exports to the US are mostly focused on pipes and tubes (57 per cent of exports to the US in 2017, according to the Korea Iron & Steel Association), product types that the two Moody's-rated steelmakers, Posco and Hyundai Steel Company, show little exposure to, said Moody's.
“Consequently, the two companies show only a moderate exposure to the US market, because they have either diversified their export markets - as is the case with Posco - or demonstrate a high reliance on the domestic market - as is the case with Hyundai Steel,” said Hwang.