Sunday, June 26, 2022

ECONOMY | 27-01-2020 13:50

Trump extends US aluminum, steel tariffs for some products

Decision comes almost two years after administration implemented tariffs on imports of foreign raw steel and aluminium, saying they threatened viability of domestic industries.

The Donald Trump administration has expanded US trademark steel and aluminium tariffs to cover certain imported nails, staples, electrical wires and some downstream parts that go into automobiles and tractors, among other products – however, despite threats, an exemption has been granted to Argentine products.

The decision comes almost two years after the administration implemented tariffs on imports of foreign raw steel and aluminium that Trump said threatened the viability of the domestic industries and therefore threatened US national security.

Some imports of derivative aluminium products would be subject to an additional 10-percent duty, while some derivative steel products would be slapped with a 25-percent tariff, he affirmed.

Argentina, Australia, Canada and Mexico were exempted from the additional aluminium tariffs. As for the steel tariffs, exemptions were allowed for Brazil, Argentina, Canada, Australia, Mexico and South Korea.

While imports of aluminium and steel have declined since the Trump administration imposed levies, some derivative products “have significantly increased since the imposition of the tariffs and quotas,” according to Trump’s proclamation.

Trump precised in the document that he had agreed with Commerce Secretary Wilbur Ross in his findings that aluminum articles and steel articles were being imported into the United States in such quantities and under and under such circumstances as to threaten to impair the national security of the United States.

After the tariffs were imposed in 2018, US steelmakers, including Nucor Corp, US Steel Corp. and Steel Dynamics Inc enjoyed increased profits, which provided a catalyst for them to restart steel capacity or build new plants in the country.

While steel prices initially rose, they’re down about 30 percent since the president’s announcement in March 2018.

Steel companies, as well as American aluminium producers, including Alcoa Corp and Century Aluminum Co, have seen shares fall because of declining demand – alongside a dip in manufacturing activity, and because of increased domestic supply coming online.

National security concerns regarding trade fall under Section 232 of the Trade Expansion Act. The original 232 decision of 2018 covered raw metal making and did not include downstream parts, which was a complaint among some domestic makers of parts that go into heavy machinery, automobiles, airplanes and other goods, who worried that importers would avoid the tariffs by simply importing value-added products.

Since the beginning of his administration, Trump has used tariffs – and the threat of them – to affect policy.

Earlier this week, at the World Economic Forum in Davos, Switzerland, he warned European leaders of new penalties if they were not willing to compromise on a trade deal before the US elections in November.

Trump departed from the more conciliatory tone he had struck earlier in the week, once again highlighting the option of tariffs on imports of European cars and parts and claiming that he targeted China first in his trade war because an unfair European Union is harder to deal with.

“They have trade barriers where you can’t trade, they have tariffs all over the place, they make it impossible,” Trump stated Wednesday. “They are frankly more difficult to do business with than China.”

And last month, Trump reinstated tariffs on aluminum and steel from Argentina and Brazil, nations that he criticized for cheapening their currencies to the detriment of US farmers, and he again called on the US Federal Reserve to loosen monetary policy.

Linking his trade agenda with his Fed criticism in an early morning tweet, he proclaimed the two South American countries “have been presiding over a massive devaluation of their currencies, which is not good for our farmers.”

by Joe Deaux, Bloomberg

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