In 15 days, the USA will levy a 25% tariff on steel imports and a 10% tariff on aluminium imports which will be applied to all exporting nations with the (temporary?) exception of Canada and Mexico. The exception is due to the fact that Canada and Mexico are currently involved in NAFTA discussions with the USA.
The US’s major import partners for steel are Canada and the EU, but it also imports significant quantities from South Korea, Mexico and Brazil. Other import sources include Japan, Taiwan, China, Russia and Turkey. Whilst China has long been accused of “dumping” steel on the international market, the idea that the USA views the trading practices of other major economies as unfair is likely to cause ructions with many of the US’s trading partners ready to set retaliatory tariffs on US exports.
The move has caused consternation in segments of the ruling US Republican party. Mr Trump’s senior economics advisor, Gary Cohn, has resigned in protest at the move which splits Republican support. The Speaker of the House, Paul Ryan (Rep) warned of “unintended consequences” to the move; Orrin Hatch (Rep) chairs the Senate Finance Committee and thinks that Trump has been “misled” by his advisors (but not Cohn, evidently). Jeff Lake (Rep) went further saying: “I urge my colleagues to pass it before this exercise in protectionism inflicts any more damage on the economy” and vowing to introduce a bill to cancel the tariffs.
At Thursday’s signing ceremony, Mr Trump said: “Our greatest presidents from Washington, to Jackson, to Lincoln, to McKinley and others – they protected our country from outside influence, from other countries coming in and stealing our wealth and stealing our jobs and stealing our companies. And we’re going to be very fair, we’re going to be very flexible, but we’re going to protect the American worker, as I said I would do in my campaign.”
The president’s remarks will not be received well in many global capitals. The justification for the tariffs is on national security grounds, but that is unlikely to stop a number of nations from referring the matter to the WTO for adjudication.