Trump offers tariff exemptions
‘‘You’re going to see countries camping out in Washington and trying to figure out who they need to talk to.’’ Wendy Cutler, Asia Society Policy Institute
Ever a deal-maker, President Donald Trump is making a bold gamble by inviting the countries of the world to negotiate their way out of heavy new taxes on steel and aluminum imported to the United States.
When Trump announced yesterday that he was slapping tariffs of 25 per cent on imported steel and 10 per cent on aluminum, he temporarily exempted big steel producers Canada and Mexico — provided they agree to renegotiate a North American trade deal to his satisfaction.
Other countries, too, could be spared, the president said, if they can convince the administration that their steel and aluminum exports don’t threaten American industry.
By offering countries a way to escape the tariffs, Trump might have eased the risk of a destructive trade war. At least for now.
But ‘‘it introduces a lot of uncertainty,’’ says Wendy Cutler, a former US trade official now at the Asia Society Policy Institute. ‘‘You’re going to see countries camping out in Washington and trying to figure out who they need to talk to.’’
Here’s a closer look at what Trump’s action does, how it would work and whether it’s likely to succeed. Trump dusted off an obscure section of American trade law: It says the president can impose tariffs on imports that pose a threat to US security.
The president has ‘‘huge leeway because it’s national security,’’ says Amanda DeBusk, a trade lawyer and partner at Hughes Hubbard & Reed LLP. ‘‘He can impose tariffs as high or low as he wants.’’
The administration argued that healthy steel and aluminum industries are vital to the national defence. The tariffs, to take effect in 15 days, are designed to reinvigorate those industries.
US steel and aluminum producers — and their counterparts around the world — have been hammered by overproduction by China. Beijing’s explosive output has depressed global metals prices and forced US domestic companies to reduce production and cut jobs.
‘‘The American aluminum and steel industry has been ravaged by aggressive foreign trade practices,’’ Trump declared at a White House ceremony, surrounded by steel and aluminum workers holding white hard hats. ‘‘It’s really an assault on our country.’’ But Chinese metal imports to the United States are already heavily restricted. China is just America’s 11th-biggest supplier of foreign steel and the fourth-biggest supplier of aluminum. As it happens, a staunch US ally, Canada, is by far the biggest foreign supplier of both metals to the United States and therefore stood to be hurt the most by the tariffs.
The administration had come under intense pressure to exempt Canada. Critics called it absurd to claim that Canadian imports threatened US national security. So Trump agreed to indefinitely exempt Canada and Mexico, another ally and metals supplier.
However, Canada and Mexico could lose the exemption – and be slapped with the tariffs – if negotiations to overhaul the North American Free Trade Agreement collapse. As a presidential candidate, Trump had campaigned against Nafta as a job-killing disaster that he said encouraged American companies to move factories to Mexico to exploit cheap labour. Renegotiations over Nafta began last summer but have stalled over tough US demands.