Is this the beginning of an all-out trade war?

● Steel’s had a bad week. Prices in China have slumped as inventories rise in the country that makes half the world’s supply, and increasing US trade protectionism may only make matters worse.

Stockpiles in China could be set to expand even further as mills prepare to ramp up output after the end of winter curbs. And now US President Donald Trump has slapped 25% tariffs on US imports, with some exemptions, stoking concerns that steel blocked by the move could wash back into global markets.

A growing fear, too, is that retaliation from countries targeted by the tariffs will spill over into other products and escalate into a global trade war, hurting the world economy and demand for everything from copper to crude oil.

China, the biggest consumer of commodities, has already said it will take “strong” measures to protect its interests.

Futures for steel reinforcement bar, a benchmark product used in construction, plunged 7.8% this week in Shanghai, the worst performance in about a year. Shares of Baoshan Iron & Steel, the listed unit of China’s biggest producer, lost 13% in the past two weeks, including a 3% drop on Friday after Trump signed the order. Shares of other Asian steelmakers were down on Friday, too, with Posco sliding 3.6% in Seoul.

Analysts in China attribute the decline in prices to mounting inventories, rather than the Trump tariffs. “Demand hasn’t rebounded as much as the market was expecting, causing stockpiles of steel to rise rapidly,” said Zhao Xiaobo, an analyst at Chinese brokerage Sinosteel Futures.

“Worries about the high levels of inventory will continue to plague the market.”

The tariffs add to the bearish mood. The China Iron & Steel Association has called on the government to adopt countermeasures against US steel as well as coal, agricultural and consumer electronic products. Bloomberg