US tariffs spark global reaction
Ministry sees strong growth for Kingdom
THE Trump administration’s steel and aluminium tariffs are provoking a chain reaction around the globe, as governments from Europe to Canada prepare to erect barriers to prevent cheap metal once bound for the United States from entering their markets.
On Tuesday, Prime Minister Justin Trudeau of Canada announced a series of regulatory changes that would make it easier for border officials to block steel and aluminium imports into that nation. The European Union has begun a “safeguard investigation” that could result in tariffs or other trade actions if it determines that steel intended for the US market is being diverted to the bloc.
“These past few days, we’ve looked at strengthening the measures we already have in place because it’s important that we not be taking in dumped steel from around the world,” Trudeau told reporters in Ottawa.
Foreign policymakers have long shared President Donald Trump’s concerns about cheap foreign steel flooding their markets, particularly from China. But Trump’s stiff 25 percent steel tariffs and 10 percent aluminium tariffs, which will halt the flow of foreign metals into the United States, have prompted other countries to move more rapidly to curtail overseas imports.
The response could help Trump claim victory on one of his primary trade goals: cutting down on a glut of cheap Chinese steel, including metals that are routed through other countries through a process known as transshipping.
This month, Trump called transshipping “a big deal” and argued that China routes much more steel to the United States than the statistics show. Administration officials have contended that Chinese steel is lightly processed and shipped through other countries, but they have been unable to quantify the pervasiveness of this practice.
The American metals industry has long claimed that it is powerless against an onslaught of cheap metal from China, which now produces roughly half of the world’s steel and aluminium. Companies argue that past efforts to get China to reduce overcapacity have largely failed, and that the only recourse is taking broader action that could galvanise a global movement.
Scott N Paul, the head of the Alliance for American Manufacturing and a supporter of the tariffs, said countries were taking initial steps toward a series of agreements and discussions that could help to squeeze out overcapacity and anti-competitive practices.
“Other large steel countries and blocs will necessarily step up to the plate and take a tougher line with China and on transshipment and circumvention. I think you see that occurring in the EU with its safeguard investigation, and I think you see that with respect to the Canadian government,” he said. “I don’t think this is by any means the conclusion of the process. I think it’s just getting started.”
By restricting the supply of foreign metals in the US, the tariffs are meant to raise the domestic price of those metals, which will translate into profits for struggling American metal makers. But in the process, more cheap metal will be available in markets outside the United States. That will push down the global price of steel and aluminium and create a two-tiered market.
After Trump announced his tariffs, trade unions and Canada’s steel and aluminium industries warned Trudeau that, without its own measures, Canada could be flooded with cheap steel and aluminium from countries that export at artificially low prices.
European officials have also argued that, without protections, their companies could become collateral damage. Officials in Brussels have warned that they will take “safeguard measures” in the form of additional tariffs on steel products if an inquiry into the US tariffs shows there could be a significant surge in cheap steel imports.
“The EU is more than an innocent bystander,” said Fredrik Erixon, the director for the European Center for International Political Economy, a think tank based in Brussels.
The European Union already has anti-dumping tariffs on steel in place, mainly directed toward cheap Chinese imports. But the bloc’s leaders have also made clear they are prepared to do more and to exert diplomatic pressure on Beijing, pushing China to reduce government subsidies for its steel sector, cut import tariffs and open its market to American and European steel.
Some supporters of the tariffs see the moves as evidence that the Trump administration’s strategy is working. But other trade experts see this chain reaction as the first in a damaging series of actions that will end up raising the price of metals globally and making markets around the world less free.
Eswar Prasad, a professor of trade policy at Cornell University, said that although Trump’s approach appeared to be bearing fruit in the short term, it could ultimately hurt the trust of US trading partners and hamper the economy.
“Even if it looks like other countries are lining up on the US side, and this is going to help in terms of reducing steel and aluminium supply, it may do very little for employment in those industries, and it may end up hurting other industries that use steel and aluminium as imports,” he said. “So we could end up with a somewhat Pyrrhic victory for the United States.” CAMBODIA should continue to see steady economic growth at about 7 percent this year despite potential investor caution that could arise ahead of July’s national election, officials from the Ministry of Economy and Finance (MEF) said on Wednesday.
Vongsey Vissoth, a secretary of state at MEF, presented the details of the ministry’s 2018 economic forecast at a forum held in Phnom Penh, and was largely bullish on the prospects for economic growth.
“Exports continue to grow, and imports are still rising; retail and wholesale activities remain strong, and the tourism industry is also stronger; domestic credit to the private sector continues to grow, and the price of land is not declining,” he said. “These are the leading indicators that reflect the fact that Cambodia’s economy is strong and robust.”
The slowing growth of the garment industry should be offset by a sharp rise in the construction sector, according to the presentation, which was largely in-step with other predictions from the World Bank and International Monetary Fund.
One potential challenge raised by the official was Cambodia’s trade deficit, as the MEF forecasted $12.2 billion in exports and $15.9 billion in imports this year. Other challenges included Cambodia’s weak logistical infrastructure, low labour productivity and persistent “informal fees” for businesses.