Trump Will Approve Aluminum, Steel Tariffs Next Week

Gateway Logistics Group • March 1, 2018

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President plans to impose 25% duties on steel imports and 10% on aluminum, for a period not yet determined

WASHINGTON—President Donald Trump said he would impose steep global tariffs on steel and aluminum imports, intensifying his campaign to pursue a newly aggressive “America First” trade policy.

Mr. Trump announced the plans—tariffs of 25% on imported steel and 10% on imported aluminum—on Thursday at a White House meeting with 15 executives from what he labeled bedrock American industries.

“You’re going to see a lot of good things happen. You’re going to see expansion of the companies,” the president said, adding that the trade curbs would provide protection “for a long period.”

He said the move—which was criticized by some U.S. manufacturers and free-trade advocates—is necessary due to what he described as a trade imbalance benefiting other countries. “When it comes to a time when our country can’t make aluminum and steel, you almost don’t have much of a country,” he added.

Mr. Trump justified the tariffs by invoking a little-used Cold War era law that gives presidents broad discretion to curb imports deemed a threat to “national security.” The announcement was based on studies conducted by the Commerce Department, made public last month, which concluded metals imports had eroded the country’s ability to make its own weapons, tanks, and aircraft. But it came over the objections of Mr. Trump’s own Defense Department, which cautioned against a backlash from close allies like Canada and Japan.

Mr. Trump’s announcement came over the objections of some of his top advisers, and surprised many in the White House who first learned of the plans from news reports Wednesday night.

As a sign of how eager the president was to take big action, he chose the toughest of the three options presented to him by Commerce, which had also outlined a more targeted approach aimed only at certain countries. Officials didn’t provide any further immediate details, and Mr. Trump said he wouldn’t sign the formal order until next week. Officials have said that companies and countries could over the next few weeks petition for exemptions to the new policies.

Shares of steel and aluminum makers swung wildly from their open on Thursday, moving sharply higher in early trading in anticipation of a tariff announcement, Stocks plunged when word reached Wall Street that Thursday’s meeting might not include a tariff announcement. Stocks soared again when the president revealed his plans.

While the executives meeting the president cheered the move, it drew swift criticism from other industries and economists warning of sharp cost increases among users of the metals, and retaliation from trading partners.

“The tariffs announced today will be detrimental to the motor vehicle parts supplier industry and the 871,000 U.S. jobs it directly creates,” said Steve Handschuh, head of the Motor Equipment Manufacturers Association. “Tariffs limit access to necessary specialty products, raise the cost of motor vehicles to consumers, and impair the industry’s ability to compete in the global marketplace.”

Eswar Prasad, a Cornell economist said the moves “herald a declaration of open war on major trading partners and undercut the multilateral trading system.”

The new tariffs underscore Mr. Trump’s pivot in his second year in office to reorient decades of American policies aimed at expanding free trade and globalization. The steel and aluminum protections come a month after the White House unveiled similar tariffs and quotas on solar panels and washing machines, invoking a different little-used 1974 trade law allowing U.S. industries to seek sweeping protection if they can show significant injury from a sudden surge in foreign competition.

Trump aides are also weighing a broad package of trade and investment penalties against China, as they complete a detailed study accusing Beijing of widespread theft and expropriation of American intellectual property. Thursday’s decision on steel and aluminum is aimed in particular at China, whose overcapacity in those industries has fueled a global glut hampering American producers.

The announcement appeared to be a diplomatic jab at President Xi Jinping, coming the same day his top economic adviser was meeting at the White House with the Trump economic team to try to ease trade tensions.

The new tariffs seem to reflect rising power inside the Trump administration of his economic nationalist aides, who have tangled over the past year with his more globalist free-trade oriented advisers. The infighting was evident Wednesday night, with some officials insisting a decision was imminent and others saying it was still being deliberated.

Peter Navarro, an economist who crafted much of Mr. Trump’s protectionist 2016 campaign platform, is slated for a promotion giving him a greater voice in internal debates, after staff secretary Rob Porter, a free-trade Republican aide tasked overseeing coordination of trade policy, was forced out in a spousal abuse scandal.

But confusion lingered surrounding the policy. One of the executives at meeting with Mr. Trump, Nucor Corp. Chief Executive John Ferriola, said he understood that more discussions were needed to finalize aspects of the new policy and that “no decision has been made on how long they will last.” Still, Mr. Ferriola said that he left the White House “very confident that something will happen and it will happen very quickly.”

Many congressional Democrats and labor unions are likely to cheer the steel and aluminum decisions, which they had long advocated.

“This welcome action is long overdue for shuttered steel plants across Ohio,” said Ohio Democratic Sen. Sherrod Brown, who has been working closely with Mr. Trump and his trade team to craft such new policies.

Mr. Trump has repeatedly said that his 2016 campaign pledge for greater steel protection won him the presidency, and his U.S. trade representative, Robert Lighthizer, talks of tougher trade policies creating a “new coalition” in support of trade, by winning over Democrats who have grown increasingly hostile to globalization over the past quarter-century. Mr. Trump is hoping to solidify his political base in advance of midterm congressional elections this year, and the announcement comes ahead of a March 13 special House contest in Pennsylvania steel country.

But the decision is likely to open a rift between the White House and traditional free-trade Republicans in Congress, who have become increasingly vocal in recent weeks urging Mr. Trump to avoid taking such action.

“Let’s be clear: the president is proposing a massive tax increase on American families,” Nebraska GOP Sen. Ben Sasse said. “You’d expect a policy this bad from a leftist administration, not a supposedly Republican one.”

The decision also quickly drew complaints from allies and trading partners, who have repeatedly warned that such action could prompt them to retaliate.

Tadaaki Yamaguchi, chairman of the Japan Steel Information center, blasted the policies as “ill-advised and naive,” and warned that “it will inevitably invite retaliation from America’s most reliable allies, ultimately hurting American nonmanufacturing industries as well.”

Representatives from a long list of countries, from Mexico to Brazil to South Korea have traveled to Washington in recent days in anticipation of the decision, seeking to have their industries spared.

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