"Will have big problems" How Trump's tariffs are making the Ukrainian steel industry tremble
Production continues at the Zaporizhzhal plant despite the Russian war of aggression. The most important ally so far could make the situation even worse for the Ukrainian steel industry.
17.02.2025, 23:09
17.02.2025, 23:10
dpa
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- After almost three years of war, Ukrainian steelworks are practising perseverance.
- The problems are particularly evident at the Zaporizhzhal plant - especially after the announcement of new tariffs by US President Donald Trump.
- But it is not only in Ukraine that steel companies are facing new challenges. Trump's plans are also jeopardizing their business elsewhere.
The Zaporizhzhal steelworks in Ukraine is a dystopian labyrinth - big enough to be a small town. Sparks thunder from the open furnaces where workers smelt iron ore into metal day and night.
The plant is located in the partially Russian-occupied region of Zaporizhia in the industrialized east of the country. It is one of the largest steelworks in Ukraine - and runs the risk of being brought to a standstill by Russian attacks at any time. There is daily fighting on the front line just 40 kilometers away, while materials for the arms industry, as well as for foreign manufacturers of cars and household appliances and the construction industry, are produced here.
"Morale is not as high as it used to be. We're pretty tired here," says plant manager Serhij Shyvochenko. "But there is no way back. The only way is forward."
Trump's announcement would severely weaken the steel industry
For some time now, the huge factory complex has been confronted with a second front, so to speak: the potential trade war that US President Donald Trump has been conjuring up since taking office in January. Last week, the Republican announced tariffs of at least 25% on steel and aluminum imports into the US. The decision could damage an important sector of Ukraine's ailing economy.
Representatives of the government in Kiev and business leaders were shocked by Trump's decree on February 10, which also underscored the growing uncertainty in the country's relationship with its most important ally to date in the defensive battle against Russia. Trump says he wants to use an arsenal of tariffs to create a level playing field in global trade and make US production facilities more competitive.
The steel industry's share of Ukraine's economy has fallen by almost half since the Russian invasion in February 2022. Steel exports are far below pre-war levels, partly because Russia has captured some plants.
The Ukrainian Steel Association says that if the US import tariffs come into force as planned on March 12, it will cost the weakened industry 2.4 billion hryvnia (more than 52 million Swiss francs) in revenue and the government one billion hryvnia (around 22 million Swiss francs) in taxes every year.
Trump talks to Putin - and leaves Ukraine in doubt
And it is not the only measure from Washington that has set alarm bells ringing in Kiev in the past week: with a telephone conversation with Russian President Vladimir Putin, Trump broke the isolation of the Kremlin leader that his predecessor Joe Biden and other Western heads of state and government had been trying so hard to achieve since the invasion of Ukraine.
He will probably meet Putin in person in the near future, Trump said. He thus reinforced the concern that Kiev could be excluded from possible peace talks and that its interests could be ignored.
Statements by Trump and his Defense Secretary Pete Hegseth, who called Ukraine's future NATO membership unrealistic during a visit to Brussels, reinforced the impression that Ukraine can no longer count on the USA.
Trump had recently indicated that he wanted to gain access to Ukraine's rare earths in order to continue providing it with military support.
Steelworks groan under staff shortages
Shyvochenko approaches the huge mouth of a blast furnace at the Zaporizhzhal plant. A blast of oxygen raises the heat to almost 2000 degrees Celsius. Workers in protective clothing direct the glowing stream of molten steel.
For Shyvochenko and other steel workers, it has basically been a case of making more out of less since the Russian troops invaded. The complex is working at 75 percent of its capacity and with twelve percent fewer staff. Many workers have either been called up for military service or have left the country, according to Metinvest, which owns the steelworks.
Metinvest lost control of two other steelworks when Russian troops took the city of Mariupol after a month-long siege in 2022. And most recently, advances by the Russian military also cost the company an important coal mine in the Donetsk region.
Experts fear negative domino effect
As the troops advanced, Metinvest halted operations at the Pokrovsk mine and evacuated the workers. Coke is an important building block in steel production. To keep Zaporizhzhal running, Metinvest has to import one million tons of the fuel per year from Europe and the USA, says factory manager Taras Shevchenko.
The ongoing war has already brought other challenges, such as rising energy costs due to Russian attacks on the Ukrainian power grid. Blockades and bombs have disrupted trade routes. Complex export logistics required Metinvest to shift its focus from supplying Asia and the Middle East to finding customers in Europe. It was a painful process, says Shevchenko.
There is also concern that the US steel tariffs will have undesirable side effects - for example, that European countries will impose import duties on Ukrainian products to offset new taxes on their goods, as Metinvest says.
Metinvest boss worried: "Will have big problems"
Oleksandr Myronenko, Chief Operating Officer of the Metinvest Group, says that Europe is the destination for around 80 percent of his company's export products. The Group also has a plant in Bulgaria that exports steel products for the construction industry to the USA.
These could also be affected by the tariffs - and demand could shrink, says Myronenko. "We will have very big problems in the Bulgarian factory." The factory workers are hoping for the best in this period of uncertainty, he says.
"We can be tired, we can be tense, we can be anything," says Myronenko. "But we have to persevere and work."
