US tariffs on steel and aluminum : how will it affect Spain?
By Ion Jauregui - Analyst ActivTrades
President Trump's recent announcement of a 25% tariff on steel and aluminum imports, along with reciprocal tariff measures, has set off alarm bells in Europe. As the United States reaffirms its protectionist policy, it is quite possible that the measure could trigger a series of negative effects on the Spanish economy. The decision, communicated from Air Force One en route to New Orleans and on the eve of the Super Bowl, is part of a strategy that seeks to protect U.S. domestic industry from what it considers to be unfair trade practices. However, for Spain - and, by extension, for the European Union as a whole - the repercussions could be manifold. Given the relevance of these metals in key sectors and the exposure of several IBEX 35 companies to fluctuations in these inputs.
Impact on the supply chain
Steel and aluminum are key raw materials for key sectors in Spain, such as the automotive, construction and machinery manufacturing industries. An increase in their prices at international level could translate into higher costs for companies, affecting not only the competitiveness of local industry, but also the final price of products. A rise in the costs of these raw materials has a direct impact on production and, ultimately, on the end consumer. In the industrial sector, this will have an impact on production costs, generating inflation in those industries that purchase such products to produce a service, in particular, the USA will generate inflation for itself if it wishes to purchase such products from Europe. It is possible that these affected companies will end up looking for suppliers that do not have tariff conflicts with the U.S. to mitigate their trade costs and thus maintain their competitiveness in the local U.S. market.
The importance of steel and aluminum in the Spanish industry
Steel and aluminum are essential raw materials for several reasons:
- Versatility and strength: these metals are fundamental in the manufacture of structural components, machinery, vehicles and construction elements. Their use extends to sectors as varied as automotive, construction and renewable energy.
- Specific properties: Steel stands out for its high strength and durability, which makes it indispensable in infrastructure construction and the manufacture of heavy machinery. Aluminum, on the other hand, is prized for its lightness and corrosion resistance, crucial properties for the transportation industry and the manufacture of aerodynamic components.
- Integration into global value chains: Spain is highly dependent on these metals for both the manufacture of consumer products and infrastructure projects. Any variation in international prices has a direct impact on the production costs of key sectors, affecting competitiveness both in the domestic market and abroad.
Retaliation and Reactions from Europe
Faced with this unilateral measure, the European Union could be forced to respond with tariffs of its own, which would further aggravate the situation. Spanish exporters, traditionally strong in industrial sectors, could face additional barriers in the U.S. market, one of their traditional destinations. The uncertainty in international trade adds to a global context already marked by trade tensions and fluctuations in commodity prices. The reactions of authorities and business representatives have not been long in coming, calling for caution, but it is foreseeable for SMEs and large companies a scenario in which production costs will increase, affecting the industrial sector. Many voices are redirecting their gaze to other markets, diversifying their dependence on the U.S. and looking for an increase in intra-European consumer collaboration and Mercosur Treaty countries seeking to alleviate these protections that affect a wide variety of European sectors.
IBEX 35 companies potentially affected
Several companies listed on the IBEX 35 will be impacted by the rise in the price of steel and aluminum, due to their high dependence on these inputs:
- Acerinox: As one of the largest stainless steel producers, Acerinox is directly linked to the steel market. The measure could have a double effect: while greater trade protection could favor the competitiveness of its products in the domestic market, higher costs in imported raw materials could affect its cost structure.
- ACS and Ferrovial: These two large construction and infrastructure companies use large volumes of steel in their projects. The increase in the cost of these materials could translate into higher construction budgets and pressure on profit margins, affecting the planning of new projects both in Spain and in other international markets.
- Siemens Gamesa: Although its main activity is focused on the manufacture of wind turbines and renewable energy solutions, the production of wind turbines requires a considerable amount of steel and aluminum. The higher costs of these inputs can affect the competitiveness of its projects, especially in a global context where cost reduction is key to winning contracts.
- Acciona: With a presence in the construction, infrastructure and renewable energy sectors, Acciona is also a player that could feel the impact of a rise in the prices of these metals. Dependence on large-scale projects and the integration of complex supply chains mean that the company must rethink strategies to remain competitive.
Competitiveness implications and adaptation strategies
The increase in tariffs generates a domino effect that affects everything from the supply chain to the market strategy of Spanish companies:
- Production costs and margins: by increasing the price of steel and aluminum, companies see their profit margins reduced. Some will be able to pass on part of these costs to final prices, although this could affect competitiveness against international competitors that are not exposed to the same increases.
- Risk in infrastructure projects: Large construction and infrastructure projects, in which companies such as ACS and Ferrovial participate, may suffer delays or revisions in their budgets due to the increase in basic inputs. This uncertainty may impact investment and economic activity in the sector.
- Mitigation strategies: Affected companies could choose to diversify their suppliers and seek local or alternative raw material sources. In addition, investment in efficiency processes and technologies that optimize the use of these metals will be essential to offset the impact of higher costs.
- Coordinated response at the European level: Given that Spain is part of the European Union, the adoption of a coordinated response by the bloc could mitigate to some extent the negative effects of the US tariff policy, either through bilateral negotiations or the implementation of reciprocal measures.
Technical Analysis IBEX 35 (Ticker AT: ESP35)
During the past week the index has been reflecting continued rises until reaching an apparent continuation zone. Today seems to start the session continuing Friday's highs at 12766.84 points in a sideways move at 12721 points which coincides with the current control point (POC). RSI indicates a slight oversold of 58.30% with an average of 60.47% which indicates that it could try to find the highs again to test if the index advances to the upside. If it is not pierced, the correction could move it in the direction of 12,481 points, the price reached on February 5.
Short- and medium-term outlook
The uncertainty generated by these tariffs could prompt Spanish companies to seek alternatives in the supply chain, reducing their dependence on volatile markets. Also, the possibility of retaliation by the European Commission opens the door to a readjustment in transatlantic trade relations. In the meantime, a coordinated response among EU member countries can be expected to be crucial to limit the negative impact on the regional economy. Already this week European military units have been mobilized in anticipation of a possible U.S. invasion of Greenland, mirroring U.S. foreign policy. In short, the tariff policy promoted by Washington not only underlines the tensions in international trade, but also poses a challenge for the Spanish economy. The coming weeks will be decisive in defining whether Trump's measures will usher in a new era of protectionism or whether a balance will be achieved in an increasingly uncertain global environment.
The 25% tariffs on steel and aluminum represent a major challenge for Spanish industry, where these metals play a crucial role in construction, automotive and renewable energies. IBEX 35 companies such as Acerinox, ACS, Ferrovial, Siemens Gamesa and Acciona are at the center of this disruption, having to adapt their strategies to remain competitive in an increasingly volatile global environment. The key to mitigating these impacts lies in the diversification of the supply chain, investment in efficiency and a coordinated response at the European level, essential elements to face the pressures of an international market marked by protectionist tendencies.
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The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
President Trump's recent announcement of a 25% tariff on steel and aluminum imports, along with reciprocal tariff measures, has set off alarm bells in Europe. As the United States reaffirms its protectionist policy, it is quite possible that the measure could trigger a series of negative effects on the Spanish economy. The decision, communicated from Air Force One en route to New Orleans and on the eve of the Super Bowl, is part of a strategy that seeks to protect U.S. domestic industry from what it considers to be unfair trade practices. However, for Spain - and, by extension, for the European Union as a whole - the repercussions could be manifold. Given the relevance of these metals in key sectors and the exposure of several IBEX 35 companies to fluctuations in these inputs.
Impact on the supply chain
Steel and aluminum are key raw materials for key sectors in Spain, such as the automotive, construction and machinery manufacturing industries. An increase in their prices at international level could translate into higher costs for companies, affecting not only the competitiveness of local industry, but also the final price of products. A rise in the costs of these raw materials has a direct impact on production and, ultimately, on the end consumer. In the industrial sector, this will have an impact on production costs, generating inflation in those industries that purchase such products to produce a service, in particular, the USA will generate inflation for itself if it wishes to purchase such products from Europe. It is possible that these affected companies will end up looking for suppliers that do not have tariff conflicts with the U.S. to mitigate their trade costs and thus maintain their competitiveness in the local U.S. market.
The importance of steel and aluminum in the Spanish industry
Steel and aluminum are essential raw materials for several reasons:
- Versatility and strength: these metals are fundamental in the manufacture of structural components, machinery, vehicles and construction elements. Their use extends to sectors as varied as automotive, construction and renewable energy.
- Specific properties: Steel stands out for its high strength and durability, which makes it indispensable in infrastructure construction and the manufacture of heavy machinery. Aluminum, on the other hand, is prized for its lightness and corrosion resistance, crucial properties for the transportation industry and the manufacture of aerodynamic components.
- Integration into global value chains: Spain is highly dependent on these metals for both the manufacture of consumer products and infrastructure projects. Any variation in international prices has a direct impact on the production costs of key sectors, affecting competitiveness both in the domestic market and abroad.
Retaliation and Reactions from Europe
Faced with this unilateral measure, the European Union could be forced to respond with tariffs of its own, which would further aggravate the situation. Spanish exporters, traditionally strong in industrial sectors, could face additional barriers in the U.S. market, one of their traditional destinations. The uncertainty in international trade adds to a global context already marked by trade tensions and fluctuations in commodity prices. The reactions of authorities and business representatives have not been long in coming, calling for caution, but it is foreseeable for SMEs and large companies a scenario in which production costs will increase, affecting the industrial sector. Many voices are redirecting their gaze to other markets, diversifying their dependence on the U.S. and looking for an increase in intra-European consumer collaboration and Mercosur Treaty countries seeking to alleviate these protections that affect a wide variety of European sectors.
IBEX 35 companies potentially affected
Several companies listed on the IBEX 35 will be impacted by the rise in the price of steel and aluminum, due to their high dependence on these inputs:
- Acerinox: As one of the largest stainless steel producers, Acerinox is directly linked to the steel market. The measure could have a double effect: while greater trade protection could favor the competitiveness of its products in the domestic market, higher costs in imported raw materials could affect its cost structure.
- ACS and Ferrovial: These two large construction and infrastructure companies use large volumes of steel in their projects. The increase in the cost of these materials could translate into higher construction budgets and pressure on profit margins, affecting the planning of new projects both in Spain and in other international markets.
- Siemens Gamesa: Although its main activity is focused on the manufacture of wind turbines and renewable energy solutions, the production of wind turbines requires a considerable amount of steel and aluminum. The higher costs of these inputs can affect the competitiveness of its projects, especially in a global context where cost reduction is key to winning contracts.
- Acciona: With a presence in the construction, infrastructure and renewable energy sectors, Acciona is also a player that could feel the impact of a rise in the prices of these metals. Dependence on large-scale projects and the integration of complex supply chains mean that the company must rethink strategies to remain competitive.
Competitiveness implications and adaptation strategies
The increase in tariffs generates a domino effect that affects everything from the supply chain to the market strategy of Spanish companies:
- Production costs and margins: by increasing the price of steel and aluminum, companies see their profit margins reduced. Some will be able to pass on part of these costs to final prices, although this could affect competitiveness against international competitors that are not exposed to the same increases.
- Risk in infrastructure projects: Large construction and infrastructure projects, in which companies such as ACS and Ferrovial participate, may suffer delays or revisions in their budgets due to the increase in basic inputs. This uncertainty may impact investment and economic activity in the sector.
- Mitigation strategies: Affected companies could choose to diversify their suppliers and seek local or alternative raw material sources. In addition, investment in efficiency processes and technologies that optimize the use of these metals will be essential to offset the impact of higher costs.
- Coordinated response at the European level: Given that Spain is part of the European Union, the adoption of a coordinated response by the bloc could mitigate to some extent the negative effects of the US tariff policy, either through bilateral negotiations or the implementation of reciprocal measures.
Technical Analysis IBEX 35 (Ticker AT: ESP35)
During the past week the index has been reflecting continued rises until reaching an apparent continuation zone. Today seems to start the session continuing Friday's highs at 12766.84 points in a sideways move at 12721 points which coincides with the current control point (POC). RSI indicates a slight oversold of 58.30% with an average of 60.47% which indicates that it could try to find the highs again to test if the index advances to the upside. If it is not pierced, the correction could move it in the direction of 12,481 points, the price reached on February 5.
Short- and medium-term outlook
The uncertainty generated by these tariffs could prompt Spanish companies to seek alternatives in the supply chain, reducing their dependence on volatile markets. Also, the possibility of retaliation by the European Commission opens the door to a readjustment in transatlantic trade relations. In the meantime, a coordinated response among EU member countries can be expected to be crucial to limit the negative impact on the regional economy. Already this week European military units have been mobilized in anticipation of a possible U.S. invasion of Greenland, mirroring U.S. foreign policy. In short, the tariff policy promoted by Washington not only underlines the tensions in international trade, but also poses a challenge for the Spanish economy. The coming weeks will be decisive in defining whether Trump's measures will usher in a new era of protectionism or whether a balance will be achieved in an increasingly uncertain global environment.
The 25% tariffs on steel and aluminum represent a major challenge for Spanish industry, where these metals play a crucial role in construction, automotive and renewable energies. IBEX 35 companies such as Acerinox, ACS, Ferrovial, Siemens Gamesa and Acciona are at the center of this disruption, having to adapt their strategies to remain competitive in an increasingly volatile global environment. The key to mitigating these impacts lies in the diversification of the supply chain, investment in efficiency and a coordinated response at the European level, essential elements to face the pressures of an international market marked by protectionist tendencies.
*******************************************************************************************
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.