When is a steel tariff not a steel tariff? How about when it exempts two-thirds of steel imports? The Trump administration on Thursday said it would add more allies to the list of countries that will not face tariffs for shipping steel and aluminum into the U. S. That means that when the tariffs take effect Friday morning, metals from Canada, Mexico, the European Union, Argentina, Australia, Brazil and
When is a steel tariff not a steel tariff? How about when it exempts two-thirds of steel imports?
The Trump administration on Thursday said it would add more allies to the list of countries that will not face tariffs for shipping steel and aluminum into the U. S. That means that when the tariffs take effect Friday morning, metals from Canada, Mexico, the European Union, Argentina, Australia, Brazil and South Korea will not be affected.
That sounds like a sensible move to avoid punishing some of our closest allies. But it also blunts the effect of the tariffs, which Trump announced to much fanfare and scorn three weeks ago, and pitched as a solution to steel layoffs.
By exempting those allies, about 64 percent of steel imports to the U. S. will face no tariffs, according to a WEEKLY STANDARD analysis of Commerce Department data. The four countries sending the most steel to the U. S. in 2017 were Canada, Brazil, South Korea, and Mexico—all exempted. Rounding out the top 10 are Russia, Turkey, Japan, Germany (exempted), Taiwan, and China. (Commerce breaks out imports for Taiwan, a self-governing island claimed by China.)
News of the limits on steel tariffs came on the same day that the administration also announced it would slap new tariffs on China. Some analysts have said that risks launching a trade war, and stocks fell on those fears. The Dow Jones Industrial Average plunged more than 700 points, or about 3 percent.
Steel prices have been rising in recent months because of a strong economy and anticipation of the tariffs. By freeing so much steel from tariffs, the administration might be removing the ability of U. S. steel producers to raise prices further, which seemed to be the rationale behind the sweeping tariffs as originally proposed. In announcing tariffs of 25 percent on steel and 10 percent on aluminum on March 1, Trump cited national security and economic reasons: “We’re going to have new jobs popping up. We’re going to have much more vibrant companies.”
Some executives of U. S. steel companies advocated for the tariffs to apply even to U. S. allies. Nucor CEO John Ferriola told CNBC: “Please bear in mind that particularly the European Union, but most countries of the world, have a 25 percent or greater VAT, value-added tax, on products going into their countries from the United States. So if we impose a 25 percent tariff, all we are doing is treating them exactly as they treat us.”
But since the announcement, allies have complained about the effects of the tariffs, and U. S. companies that use steel, such as metal fabricators and automakers, have warned of collateral damage to their industries.
As TWS reported in its March 26 issue:
One of the industry’s leading trade groups, the Fabricators & Manufacturers Association, met in Scottsdale, Ariz., earlier this month, and tariffs dominated the discussions, says Ed Youdell, the association’s president. The big concern is that if metal parts suddenly cost more to produce in the United States, the manufacturing and construction industries might turn to foreign suppliers. During a panel discussion at the conference, a buyer for Briggs & Stratton, an engine-maker based in Wauwatosa, Wisc., was asked if rising prices for parts would prompt him to turn to foreign suppliers. His response: “I will do my job.” Tariffs designed to help American industry could actually help foreign steelmakers and damage U. S. metal fabricators.
Read the full article here .
Stocks of U. S. steelmakers plunged on Thursday on a down day for the markets. Nucor and Steel Dynamics were down about 6 percent and U. S. Steel was off nearly 10 percent in mid-afternoon trading.
It’s the latest example of the Trump administration reaping the publicity from a big policy change, then more quietly watering it down–as it has with prior insistences on a robust border wall, withdrawing from a climate change pact and deporting young illegal immigrants. Sometimes, those promises turn out to be more pliable than steel.
