In the steel notice, Trump cited the “ongoing discussions with these countries” alongside his decision “to exempt steel articles imports from these countries from the tariff, at least at this time”. We just need to whisper in the ears of USA trade negotiators that it’s never a wise move to cut off your nose to spite your face.
“The European Union, wonderful countries who treat the US very badly on trade, are complaining about the tariffs on Steel Aluminum”.
There is no free trade, but the US imposes fewer tariffs than nearly any other country – half the average weighted tariffs imposed by China, one-third those imposed by Mexico and one-quarter what India imposes. Higher tariffs on these products would “hurt American families”, said Hun Quach, a trade lobbyist for the Retail Industry Leaders Association.
Trump could then follow through with a threatened new tariff on European-made automobiles. A week later, as expected, he signed proclamations calling for restricting those imports. He’s using the tariffs as leverage to extract more concessions from the Canadian side in the NAFTA negotiations. Section 232 allows emergency trade sanctions on “national security” grounds. He wants to make access to USA markets contingent on foreigners’ playing by the rules (e.g., paying full price for the research costs of our technologies).
Deliberately created to be fast-acting and short-lived, the tariff started at a steep 49.4 percent before gradually falling back to the normal 4.4 percent rate over the course five years.
The tariffs are 25 percent on steel imports and 10 percent on aluminum. The move will certainly come as a huge burden to Korean steelmakers.
Canada, the top supplier of steel and aluminum to the United States market, and Mexico have been temporarily exempted from the tariffs until trilateral continental trade talks conclude.
US automakers are among the businesses with the most at stake, accounting for 38 percent of the aluminum and 15 percent of the steel consumed in the country, according to Ward’s Automotive Reports. So Europe can continue with its higher tariffs on US cars, so long as it does the same to Japanese cars. Trump said explicitly, “We’re going to hold off the tariff on those two countries to see whether we can make the deal on NAFTA”. The new levies will take effect on March 23. The company would stand to gain from both the duties and the exemption to those duties at its two United States arms. In fact, the trade action is affected by the US president’s decision.
More problematic than the USA tariffs is the likelihood that other countries will respond in kind.
“The exemptions aren’t a magical favor that was being done”, Trudeau later said in an interview with USA television’s CNBC.
He stressed that China does not want to begin a trade war and will not unleash one on the United States; however, Beijing will do everything to protect Chinese national interests.
We think this partly reflects the fact that Trump is no longer making empty threats, but turning hawkish rhetoric into actions. Mr. Trump began this process last April by launching investigations into the national security implications of steel and aluminum imports. There have been two members of the politburo traveling to Washington to meet with their counterparts in the US.
“We want free and open world trade because for consumers and for citizens this is the best situation”, acting German Finance Minister Peter Altmaier said. U.S. Steel and Century Aluminum are already ramping up, bringing back hundreds of workers. The three major economies take up almost half of South Korea’s total outbound shipments. “But we are not afraid, we will stand up to the bullies”, European Trade Commissioner Cecilia Malmström told journalists Monday.
US President Donald Trump is preparing to take aim at China’s technology and telecommunications sectors, according to media reports on Tuesday. Now priced at 18.8 times earnings, most analysts have U.S. Steel stock pegged for only mid-single-digits profits growth over the next five years – about 5.5% compounded, according to data from SP Global Market Intelligence. South Korea needs to closely monitor its exports to the U.S.as well as American companies’ move to file a complaint against Korean firms. Taxing imported steel would help domestic steel producers, they concede, but it would drive up steel prices and put pressure on the far more numerous companies that consume steel, such as automakers and aircraft manufacturers. But the US will certainly continue to strengthen its trade pressure against Korea.
This would not be good news for investors who piled into steel stocks over the past month, hoping to reap windfall profits from an industry sheltering under the protection of Trump-imposed tariffs.