RELATED REPORTS
The move may keep trading partners from unleashing immediate retaliation
With the stroke of a pen, President Donald Trump has set off a race among nations and companies to win relief from his steel and aluminium tariffs.
As expected, Trump slapped a 25 per cent tariff on steel imports and 10 per cent on aluminum on Thursday. But he showed more leniency than initially thought. The US excluded Mexico and Canada, a concession that will remain in place as long as they reach agreement on a new North American Free Trade Agreement that meets US satisfaction.
More broadly, Trump threw the door open to further exclusions for countries and niche products, raising questions about whether the tariffs will have the intended effect of shoring up the domestic steel and aluminium industry to protect US national security.
While this may keep trading partners from unleashing immediate retaliation, it could all backfire by antagonising American allies. Countries refused special treatment could still hit back against the US with trade barriers of their own down the road.
The president has invited “any country with which we have a security relationship” to discuss “alternative ways” to address the security risks of steel and aluminium imports, a process that could lead to other countries being excluded, according to official proclamations Trump signed at the White House. Trump said his top trade negotiator, Robert Lighthizer, will be in charge of working out deals with other countries on possible exemptions. Trump has also given Commerce Secretary Wilbur Ross the power to provide relief to specific steel and aluminum products that aren’t produced in the US “in a sufficient and reasonably available amount or of a satisfactory quality.”
“We have to protect and build our steel and aluminium industries, while at the same time showing great flexibility and cooperation toward those who are really friends of ours, both on a trade basis and a military basis,” Trump said Thursday at a the signing ceremony attended by a group of steel and aluminum workers.
Government and companies are already lining up for a break. European Union trade chief Cecilia Malmstrom noted Europe’s close alliance with the US and argued “the EU should be excluded from these measures.” Brazil highlighted that most of its exports are semi-finished products that are used as inputs by the North American steel industry.
The US beer industry has asked Trump not to impose the tariffs on aluminum used in beer cans.
“These tariffs will stimulate two things that Trump says he loathes: regulations and lobbying,” said Bloomberg Intelligence trade-policy analyst Caitlin Webber. “Exclusions will add reams to the tariff code that US businesses will struggle to navigate. And there will be a long line of companies and countries arguing their imports should be given special treatment. ”