US President Donald Trump has delivered on his Presidential campaign promise to American steelworkers and slapped a 25% tariff on imported steel.
“We haven’t been treated fairly by other countries,” Mr Trump told journalists at a White House press conference. “But I don’t blame the other countries. When I was in China I said listen President Xi – I have a lot of respect for President Xi – I don’t blame you if you’re able to get away with making almost 500 billion dollars a year off of our country; how can I blame you? Somebody agreed to these deals and those people should be ashamed of themselves for what they’ve let happen. So we’re going to bring it back and we’re going to bring it back relatively rapidly and we’re going to be instituting tariffs”
The move comes days after the US Department of Commerce, headed by Wilbur Ross, released reports on the likely impact of imports of unfairly traded steel mill products on US national security under the much talked about Section 232 of the US Trade Expansion Act 1962.
Ross presented Trump with three key options:-
• A global tariff of at least 24% on all steel imports from all countries, or
• A tariff of at least 53% on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to the United States, or
• A quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States.
Trump opted, give or take, for the global tariff option but rounded it off to 25%.
The American steel industry is firmly behind Mr Trump, but outside of the US, understandably, there have been calls for restraint. The European Steel Association (EUROFER) has urged the US president not to trigger a global trade war, which, ultimately, would lead to job losses in the USA as those affected by US tariffs respond in kind.
EUROFER’s big worry is that Chinese steel destined for the US makes an about turn and heads for the European Union, but Donald Trump, who was keen to point out at his inauguration that his presidency meant ‘America First’ has, metaphorically speaking, put his money where his mouth is and delivered the much called for sanctions on unfairly traded steel.
Some of those affected by Trump’s announcement – namely Canada, the European Union, Mexico, China and Brazil – are weighing up their response but are likely to introduce tariffs of their own, thus triggering the much worried about trade war.
If Trump’s critics are right then the tariffs won’t protect American jobs and will put up prices for consumers.
In Asia the news from the US saw share prices dip. The Nikkei 225 was down 2% and so were shares in Toyota. Nissan shares were down 4%.
In Europe, EC President Jean-Claude Juncker said tariffs would risk thousands of European jobs.
Richard Warren, UK Steel Head of Policy, said: “Whilst we still await the precise detail of these measures, and there is still a lingering hope that these tariffs may not target the UK and EU, President Trump’s comments do indicate the introduction of blanket measures to restrict the import of all steel imports regardless of their origin.
“This would be a unilateral, and extremely blunt, approach to what is a complex global problem of overcapacity in the steel sector. This requires a coordinated global approach. Whilst we all too well understand the frustrations of the US sector, measures such as these smack of short-termism, protectionism and would be rife with unintended consequences for global trade and for the users of steel in the US.
US steel associations, however, are full of the joys of spring. Thomas J Gibson, president and CEO of the American Iron and Steel Institute (AISI) commented: “We thank the president for meeting with our industry, and following through on his commitment to addressing the steel crisis. Foreign steel imports surged again in 2017 -- up 15% from the previous year and capturing 27% of the USmarket. About one fourth of domestic steel capacity today is not being utilised. This is fuelled by the massive excess steel capacity in the world today, which is more than eight times larger than the annual output of all US steel producers, and driven by subsidies and other interventionist foreign government policies. That translates into idled plants and the loss of thousands of jobs. We are pleased that the president is addressing this issue.”
At the time of going to press, the Steel Manufacturers Association, which represents electric steelmakers, the dominant force in US steel production, had earlier commented on the findings and recommendations contained in the Section 232 Report sent to President Trump.
Philip K Bell, president of the SMA commented: "Secretary Ross has accurately concluded that steel imports threaten to impair our national security from both a defense and critical industry standpoint. The Secretary has laid out options that have the potential to be meaningful and effective to address the threat the industry faces in light of global excess capacity and relentless steel imports.”