Trump signs steel tariffs with exemptions: Update
Adds details throughout.
Washington, 8 March (Argus) — President Donald Trump today imposed tariffs on steel and aluminum imports that will take effect in 15 days but will not initially apply to Canada and Mexico.
Plans for the 25pc tariff on steel and 10pc tariff on aluminum were first announced a week ago, catching trading partners and allies on Capitol Hill by surprise. It set off a frenetic push by Republican lawmakers, world leaders and industry groups to persuade Trump that broad tariffs would result in a damaging trade war. US steelmakers, meanwhile, urged him to impose the tariffs he promised during his campaign.
Trump says the tariffs are needed to protect national security, citing the use for the metals in military equipment as well as thousands of jobs lost from steel and aluminum plants shutting down in the face of cheaper imports. The administration believes the tariffs will not cause significant increases to consumer prices.
But critics say the tariffs will cause job losses in industries that rely on steel and aluminum and prompt retaliatory tariffs on major US exports such as agricultural commodities and vehicles.
The tariff exclusion for Canada and Mexico, which accounted for 26pc of US steel imports last year, will offer more time to re-negotiate changes to the North American Free Trade Agreement and hold discussions about security. But the exemption is "not open-ended," according to a senior administration official, and could be revoked through a process that has yet to be described.
The EU and other trading partners will have the option to seek modifications to their tariffs but only if they put forward an alternative proposal about how to mitigate the alleged national security harm their imports are causing, according to the same official. And any reduction to the tariffs for one country could cause duties for every other country to increase, to maintain similar levels of protection for US manufacturers.
Oil industry officials say uncertainty around the tariffs are already having an effect, as suppliers worry about their ability to fill orders once tariffs go into effect. They are warning they may cancel billions of dollars in projects that they planned as a result of other Trump administration policies.
"All those investments depend on deregulation and tax cuts, which have been positive for the industry," ExxonMobil chief executive Darren Woods said earlier today in a televised interview. "The talk of tariffs takes us back to the opposite direction."
US imports of steel and stainless steel rose to 36.9 metric tonnes (t) last year from 30mn t in 2016, but have fallen from 40.2mn t in 2014. Canada accounted for 6.2mn t into the US in 2017, followed by Brazil at 5mn t, South Korea at 3.6mn t and Mexico at 3.4mn t, according to the US Commerce Department. China was in 11th place with 823,888 t, down from 2.9mn t in 2014, when it was the sixth top US supplier.
The US has 169 anti-dumping and countervailing duties in place for steel, 29 of which are against China. There are 25 ongoing cases. Tariffs would be imposed on top of any existing antidumping or countervailing duties in place.
A letter from 107 Republican House members to the president on 7 March urged him to drop his plans to implement broad tariffs, warning of "unintended consequences" for workers and the economy. That followed a letter from a group of House Democrats calling for hearings on US trade policy.
But steel and aluminum mills are cheering the move. Swiss trader ARG International subsidiary Magnitude 7 Metals plans to reopen a primary aluminum smelter in Missouri, according to state officials this week. The property and facility was once owned by Noranda Aluminum, which filed for Chapter 11 bankruptcy in February 2016.
And US Steel said it plans to restart one of two idled blast furnaces at its Granite City, Illinois, facility to support an anticipated rise in demand for steel in the US following the tariffs.
Trump's attempt to force trading partners to offer concessions to lift the tariffs will likely frustrate the EU and other close allies that were hoping for blanket exclusions.
"We are concerned about the state of international relations," European Central Bank president Mario Draghi said today before the tariffs were announced. "If you put tariffs on your allies, one wonders who the enemies are."
The oil and gas industry, which had sought tariff exclusions for specialty steel products not widely available in the US, is already exploring the potential to challenge tariffs in court. But such efforts might not succeed and in the near-term would do nothing to avoid tumult in an industry that uses steel in nearly every part of its business, for drilling wells, building pipelines and maintaining refineries.