United States tariffs on steel, aluminum coming at midnight

Anna Jefferson
May 31, 2018

The decision, announced by Commerce Secretary Wilbur Ross, came hours before these temporary exemptions were due to elapse at 12:01am in Washington on Friday.

The three close USA allies had been part of a small group of foreign governments that received temporary exemptions from the tariffs, until trade deals could be signed.

Although the USA market amounts to a low single-digit percentage of German steel industry output, German politicians and industry groups have said they are concerned that tit-for-tat measures could end in damaging tariffs on foreign automobiles, an outcome that Trump has repeatedly threatened.

Europe did not want a trade war, he said, but Washington had to back down from "unjustified, unjustifiable and risky tariffs".

During a speech in Brussels, Jean-Claude Juncker, president of the European Commission, promised to announce retaliatory sanctions later on Thursday.

"Unilateral responses and threats over trade war will solve nothing of the serious imbalances in world trade".

The tariffs, which apply to a long list of US products that includes everything from flat-rolled steel to playing cards and felt-tipped pens, will go into effect July 1, Foreign Affairs Minister Chrystia Freeland told a news conference Thursday.

And despite the picking and choosing of which allies that the USA decides to slap with these tariffs, Ross defended the US legal justification that they are being implemented under law meant to protect USA national security. Canada and Mexico have also threatened retaliation, but have not publicly indicated which USA products they would hit. Growing trade tensions have clouded a benign outlook for the global economy, which is on track to grow at its fastest pace in seven years this year and next, according to the International Monetary Fund.

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Washington will impose tariffs on steel and aluminum imports from the European Union, Canada and Mexico from midnight on Thursday, ending months of uncertainty over potential exemptions and sharply escalating the risk of a trade war.

Secretary of Commerce Wilbur Ross testifies during the House Oversight and Government Reform Committee hearing on the census, October 12, 2017. But nobody knows for sure, and the fear is that the United States action will damage business confidence at a time when growth is slowing.

The shares of American steel producers, which have supported the tariffs, rose across the board on Thursday.

Worries about a United States trade war with the European Union weighed on Wall Street stocks at the open, but shares of U.S. steel and aluminum makers were up strongly. U.S. Steel Corp., AK Steel Holding Corp. and Steel Dynamics Inc. all gained in NY.

'The next question would be: how will the President react?

The tariffs - 25 percent on steel and 10 percent on aluminum - will take effect at midnight Thursday, marking a major escalation of the trade war between the US and its top trading partners.

The problems of steel dumping will not be solved by unfair tariffs, and steelworkers in the United Kingdom and U.S. must not fall into the trap of believing rhetoric from the likes of Donald Trump.

"Tariffs on steel and aluminum imports are a tax hike on Americans and will have damaging consequences for consumers, manufacturers and workers", said Senator Orrin Hatch of Utah, chairman of the Finance Committee, which oversees trade in the upper chamber.

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Ross himself heads to Beijing on Friday where he will attempt to get firm deals to export more USA goods in a bid to cut America's $375 billion trade deficit with China.

European officials had assumed that Trump would follow through with duties on their exports (negotiations over the Iran deal having already convinced them that trying to dissuade the USA president from scoring diplomatic own-goals was a futile enterprise).

The Trump administration said Tuesday that it is moving forward with tariffs on $50 billion worth of Chinese goods as punishment for intellectual property theft.

Ross said talks with the European Union had failed to reach a satisfactory agreement to convince Washington to continue the exemption from the tariffs imposed in March.

The imposition of the tariffs on Canada and Mexico added another layer of complexity to the sluggish renegotiation of the North American Free Trade Agreement. Further action against China has also been announced.

The administration's biggest concern is over steel exports from China, but the White House believes overcapacity in other nations must similarly be addressed. The probe was seen as an attempt to pressure Mexico and Canada over a NAFTA deal.

Malmstrom is meeting U.S. Trade Representative Robert Lighthizer in Paris on Thursday among other global trade chiefs.

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