Impact of US Steel Tariffs on BHP's Global Market Strategy & Trade

This report examines the impact of US tariffs on BHP, a leading Anglo-Australian mining and steel company. The imposition of tariffs by the US, intended to bolster domestic steel production, has had significant repercussions on global trade dynamics. The report details how these tariffs have affected BHP's market position, supply chains, and profitability. It discusses the reactions of other countries, such as Europe, China, and Australia, which implemented counter-measures to mitigate the effects of the US policy. The analysis covers the changes in global steel prices, the reduction in BHP's export volumes, and the company's strategic adjustments to maintain market demand and reduce losses. Ultimately, the report concludes that while the US tariffs aimed to strengthen its domestic industry, they created a two-tiered market and negatively impacted global steel producers like BHP, forcing them to adapt their strategies to navigate the altered trade landscape. Desklib provides a platform to explore more assignments and study resources.

Running head: IMPACT OF TARIFF ON BHP
Impact of Tariff on BHP
Name of the Student:
Name of the University:
Author Note:

1IMPACT OF TARIFF ON BHP
Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Conclusion..................................................................................................................................3
Reference and Bibliography.......................................................................................................4

2IMPACT OF TARIFF ON BHP
Introduction
BHP is one of the largest steel company and an Anglo-Australian mining, metals and
petroleum dual-listed public company in Australia. Here the discussion is on an event that has
a great impact on the market demand and supply and also on the market price and quantity.
One of the important factor is external forces created by other nations like imposition of 25%
tax on the imports of steel in US.
Discussion
The US president decided to impose higher amount of tariff on the imports to enhance
the growth of the domestic business and to make the strong economy. This policy was
imposed in US but the world was facing the consequences as well as the US. This happens as
two countries involve in trade and the policy was made to restrict the trade. This policy raises
the domestic price which says it was not a good policy for the economy.
The tax imposition on imports in US outrages the countries like Europe, China and
Australia. Against the policy, these countries raised the barriers to recover the steel from all
over the world. A tariff on imports simply increases the price of the product in domestic
country as it helps the domestic producer by restricting the foreign producers to enter in the
market (Gutierrez and Vianna 2018). Thus the domestic producers earns the extra profit. In
the other side, the world price falls for the product and the profit for the producers also
reduces in the world market. This is nothing but the incident that is faced by the BHP as a
foreign producer. The restriction of steel supplies to the US raised the price and profit to the
domestic firms of US and on the other side these increases the availability of cheaper steel in
the world economy and this is true for the BHP too as they BHP is one of the largest steel
suppliers. This reduces the global price of steel and creates a two-tiered market. The
imposition of higher tariff lowers the global price of the BHP which helps to raise the supply.

3IMPACT OF TARIFF ON BHP
The national income depends on the export of the steel commodities and the export of the
BHP steel has been reduced hugely. Australia supplies 21% of the world’s total demand for
iron ore and contributes 8.5% of the GDP. Thus the BHP was influenced by the US trade
policy which was not implemented by aiming the BHP , the theory of trade supports them..
The trade policy reduces the production of the BHP simply the supply of the BHP output is
cut off to reduce the loss and to maintain the market demand (Zwikael and Smyrk 2019.).
This changes in the demand and supply influenced the price of the product. The price was
reduced by the trade policy as there was excess supply. However the price was increased
when the production was cut to reduce the loss margins.
There are studies that suggest that the commodity financial market always faces a
disadvantage compared to the non-commodity financial market due to a large tariff
imposition on the imports of steel which reduces the profits of multinational companies like
BHP (Caires 2018). In this scenario, it is easy to draw the conclusion that imposition of
import tariff in US reduces the profits of BHP by reducing the price with the excess supply.
Conclusion
There are several events that had significant effects on the production, supply,
demand, price and production. The policy of the US to raise the tariff suddenly was also a
great incident that force the BHP to change its plans and strategies in order to reduce the loss
for falling prices in the world economy (Moretz 2018). The steel producers in Australia along
with the BHP were greatly impacted even the worldwide large producers of the steel and Iron
ore producers were influenced greatly. In the contrary, the reverse action was taken by the
other Iron Ore producers especially Australia, Europe and China come with some economic
policies that circulates the trade smoothly in the world economy (Scott 2018).

4IMPACT OF TARIFF ON BHP
Reference and Bibliography
Caires, P.F.H., 2018. Equity research: BHP Billiton Ltd (Doctoral dissertation, Instituto
Superior de Economia e Gestão).
Gutierrez Pineda, J. and Vianna, A.C., 2018. What If Higher US Import Tariffs Reduce
Global Steel Price? Response From Stock Markets Around the World.
Gutierrez, J.P. and Vianna, A.C., 2018. Price effects of steel commodities on worldwide
stock market returns. The North American Journal of Economics and Finance.
Moretz, T., 2018. An assessment of China’s ability to regulate its iron and steel
industries. Journal of Chinese Governance, 3(1), pp.101-121.
Scott, C., 2018. Iron ore spotlight. AusIMM Bulletin, (Jun 2018), p.46.
Zwikael, O. and Smyrk, J.R., 2019. A Theoretical Framework for Projects. In Project
Management (pp. 15-43). Springer, Cham.