In the international steel business, tariffs and duties can make or break a deal. These government-imposed charges on imported or exported goods influence pricing, competitiveness, and profitability.
Whether you’re a mill exporting to foreign markets or a buyer sourcing steel internationally, navigating the complexities of trade tariffs is essential to avoid unexpected costs, penalties, or supply chain disruptions.
Understanding how to manage these financial barriers gives companies a strategic edge in pricing, planning, and market selection.
Key types of tariffs and duties in steel trade
1. Import tariffs
Charged by a country on steel products entering its borders. These can be:
- Ad valorem (percentage of the product value, e.g., 10%)
- Specific (based on weight, e.g., $100 per ton)
- Mixed (a combination of both)
These affect total landed cost and determine product competitiveness in the target market.
2. Export duties
Levied by the exporting country, often to:
- Protect domestic supply
- Control inflation
- Encourage local value addition
For example, India has imposed export duties on certain steel grades during inflation spikes.
3. Anti-dumping duties
Applied when a country believes steel is being sold below fair market value. These are often:
- High (sometimes over 100%)
- Retroactive
- Specific to certain producers or countries
They aim to protect domestic industries from unfair price competition.
4. Countervailing duties
Charged to neutralize the effect of foreign government subsidies, like energy or raw material support. These are common in cases involving Chinese steel exports.
5. Safeguard duties
Temporary measures taken to protect a local industry from a surge in imports, even if no dumping occurs. These can be applied across all sources, regardless of country.
6. Retaliatory tariffs
Applied in trade disputes (e.g., China–US tensions), where one country responds to another’s tariffs with its own—potentially impacting steel trade flows suddenly.
Key cost implications for traders and manufacturers
- Increased total cost of goods sold (COGS)
- Reduced margins or forced price increases
- Loss of competitiveness against local or FTA-covered suppliers
- Unexpected costs if policies change post-contract
- Risk of delayed shipments due to compliance checks
Strategies to navigate tariffs and duties effectively
1. Stay current on tariff rates and updates
Use:
- National customs databases
- WTO notifications
- Trade associations
- Country-specific tariff tools (e.g., U.S. Harmonized Tariff Schedule)
Exporters should monitor both home and target market tariff schedules.
2. Classify products accurately under HS codes
The Harmonized System (HS) code determines:
- Applicable duties
- License requirements
- Documentation needed
Use professional customs brokers to avoid misclassification and fines.
3. Use Free Trade Agreements (FTAs) where applicable
Products traded between FTA partner countries may qualify for reduced or zero tariffs. Examples include:
- USMCA
- EU–Japan EPA
- ASEAN FTAs
- India–UAE CEPA
Requirements typically include:
- Proof of origin
- Certificate of origin
- Compliance with specific product rules
4. Consider duty drawback programs
If steel is imported and then re-exported, many countries offer a duty refund. This lowers the effective cost of trade.
E.g., if you import hot-rolled coils, manufacture pipes, and export them, you may recover the import duties paid.
5. Utilize bonded warehouses or free trade zones
Goods can be stored in these zones without paying duties until they enter the domestic market. This:
- Delays tax liability
- Aids cash flow
- Allows product transformation or relabeling
6. Source from low-duty regions
Diversify sourcing by evaluating:
- Tariff levels
- Trade relationship stability
- Logistics costs
Sometimes buying at a slightly higher base price from a duty-exempt country is more economical.
7. Design contracts with duty clauses
Include:
- Who bears tariff risk
- What happens if duties change mid-contract
- Contingency pricing terms
- Force majeure language (for drastic changes)
This avoids disputes and protects margins.
8. Engage customs and trade experts
Consult:
- Customs brokers
- Global trade compliance firms
- Export/import lawyers
Their insights prevent costly mistakes, especially with complex multi-country shipments.
Real-world examples
Tata Steel
Used FTAs to export hot-rolled coils from India to Southeast Asia with zero tariffs, saving over $2.5 million annually in duty costs.
ArcelorMittal
Faced sudden EU safeguard measures on imports. Moved shipments into bonded zones and adjusted product labeling to reclassify under a lower tariff category.
POSCO
Set up a local manufacturing facility in a key market to avoid import tariffs. Instead of exporting flat steel, they exported slabs—classified under a different HS code with reduced duties.
JSW Steel
Worked with customs authorities in the UAE to secure duty-free entry for rebar under specific project exemptions tied to national infrastructure programs.
Common challenges and how to overcome them
| Challenge | Solution |
|---|---|
| Tariff rate changes post-sale | Include adjustable pricing or renegotiation clauses |
| Misclassification under HS codes | Use certified customs brokers and confirm with authorities |
| Complex FTA documentation | Train staff and use automated tools to ensure compliance |
| Trade disputes blocking access | Diversify export markets and maintain flexible routing |
| High costs from anti-dumping duties | Shift to regions with neutral trade relations or set up local processing |
Tools to support duty and tariff management
- HS code databases
- FTA eligibility checkers
- Trade compliance software (e.g., SAP GTS, Amber Road)
- Duty drawback claim platforms
- Tariff calculation tools integrated with ERP systems
Frequently asked questions (FAQs)
How often do tariff rates change?
They can change annually—or suddenly during trade disputes. Regular updates are essential.
Can we avoid tariffs altogether?
Only through exemptions, FTAs, bonded facilities, or shifting production into the destination country.
Are duties refundable?
Yes, through programs like duty drawback—if products are exported or reprocessed.
Is outsourcing customs management worth it?
Yes, especially for large-volume or multi-country operations where classification and compliance are critical.
Conclusion
In steel trading, understanding tariffs and duties is more than a regulatory requirement—it’s a competitive necessity. Companies that proactively manage these costs through accurate classification, strategic sourcing, and trade agreement optimization will outperform those who treat duties as a surprise line item.
By turning compliance into strategy, steel businesses can navigate today’s protectionist climate—and still thrive in global markets.
Sérgio Antonini is a Mechanical Engineer with a specialization in Competitive Business Management and over 30 years of experience working with steel in national and international markets. Through this blog, he shares insights, technical analyses, and trends related to the use of steel in engineering, covering material innovation, industrial applications, and the strategic importance of steel across different sectors. His goal is to inform and inspire professionals working with or interested in steel.