Commerce chief takes flak over tariffs
U.S. metal-making at risk, Ross says at Senate hearing
Commerce Secretary Wilbur Ross defended the Trump administration’s tar- iffs on imported steel and aluminum before Congress on Wednesday amid wither- ing, bipartisan criticism from senators who called the lev- ies unjustified and econom- ically ruinous.
“Know that you are taxing American families, you are putting American jobs at risk, and you are destroying markets — both foreign and domestic — for American businesses of all types, sorts and sizes,” Senate Finance Committee Chairman Orrin Hatch, R-Utah, told Ross at a committee hearing on the tariffs.
Ross countered, arguing that “actions taken by the president are necessary to revive America’s essential steel and aluminum industries.” He added that “allowing imports to continue unchecked threatens to impair our national security.”
The tariffs of 25 percent on imported steel and 10 percent on imported aluminum — levied on key U.S. allies including Canada and the European Union — were initiated by the administration
under a little-used provision of trade law that allows tariffs to be imposed on the basis of national security. The provision gives the administration more leeway to make trade policy unilaterally.
The tariffs are a culmination of the protectionist threats that President Donald Trump campaigned on and mark the clearest dividing line between Trump and a Republican Party that has traditionally embraced free trade.
At the hearing, senators questioned the national security rationale of imposing high tariffs on friendly countries.
“I wish we would stop invoking national security because that’s not what this is about,” Sen. Patrick J. Toomey, R-Pa., said. “This is about economic nationalism.”
Sen. John Thune, R-S.D., a member of GOP leadership, told Ross, “This thing seems to be escalating out of control fairly quickly.”
Yet despite the concerns, Republican senators declined to take what was likely their best chance to intervene when leaders blocked a vote on a bill by Toomey and Sen. Bob Corker, R-Tenn., to give Congress veto power over tariffs invoked in the name of national security. Instead, many Republicans have said they believe their best chance of influencing administration policy is in trying to persuade Trump to back off his protectionist impulses.
As of June 1, the 25 percent tariff applies to imported steel products from all countries except Argentina, Australia, Brazil and South Korea, according to a Finance Committee fact sheet. Imported steel products from Argentina, Brazil and South Korea are subject to quotas that prohibit any imports above the quota levels.
The 10 percent tariff applies to imported aluminum products from all countries except Argentina, Australia and Brazil.
In response, the targeted nations have announced a series of reciprocal tariffs and retaliatory steps, which senators said are causing prices to rise for U.S. manufacturers and other businesses.
The administration’s tariffs against Mexico and Canada have been seen as an attempt to gain leverage as the administration renegotiates the North American Free Trade Agreement. NAFTA is widely supported by congressional Republicans, most of whom do not want Trump to follow through on his campaign-trail threats to withdraw from the agreement.
Negotiations have sputtered, but Ross expressed optimism that they would pick up again after the Mexican elections, and that the ultimate result would be an improved trade pact.
Some senators appeared skeptical as they questioned the administration’s tactics.
“What is it about the Canadian steel industry that is a national security threat?” Sen. Michael Bennet, D-Colo., asked Ross.
Ross acknowledged that, in terms of dollar value, the United States actually has a trade surplus in steel with Canada. But he said the administration’s approach is necessary to persuade other nations to help curb China’s practice of routing steel and aluminum to the United States through other countries.
“The only way we’re going to solve the global steel overcapacity is getting all the countries to play ball with us,” Ross said. He contended that even as other countries are “complaining bitterly” they are also taking steps to put up barriers to China, which if taken earli-
er would have prevented the problems that Trump is trying to address.
The European Union announced Wednesday it will start taxing a range of U.S. imports Friday, including quintessentially American goods like Harley-Davidson bikes and cranberries, in response to the U.S. tariffs on European steel and aluminum.
“We are left with no other choice,” EU trade chief Cecilia Malmstrom said in a statement. “The rules of international trade, which we have developed over the years hand in hand with our American partners, cannot be violated without a reaction from our side,” she said. “Needless to say, if the U.S. removes its tariffs, our measures will also be removed.”
The European Commission in Brussels gave final approval for a 25 percent duty on $3.2 billion worth of EU imports on a range of U.S. products including Harley-Davidson Inc. motorcycles, Levi Strauss & Co. jeans and bourbon whiskey. A separate 10 percent levy is being applied to U.S. playing cards imported into the bloc.
The EU countermeasures cover about 200 categories of
U.S. products also including corn, rice, orange juice, cigarettes, cigars, T-shirts, cosmetics, boats and steel.
The EU is reserving the right to target more U.S. products with further duties no later than March 23, 2021. Second-stage retaliation would involve levies ranging from 10 percent to 50 percent on an extra $4.1 billion of American goods imported into the EU.
The goods are targeted in a way that seems designed to create the most political pressure on Trump and U.S. politicians. Harley-Davidson is from Wisconsin, the home state of Republican House Speaker Paul Ryan. And bourbon is a big product of Kentucky, home of Senate majority leader Mitch McConnell.
Trump said the measures against the EU are meant to protect U.S. national security interests, but the Europeans claim it cannot be that close allies would endanger U.S. security.
The EU exported some 5.5 million tons of steel to the U.S. last year. European steel producers are concerned about a loss of market access but also that steel from elsewhere will
flood in.
Economists note that on the whole, the U.S. and EU tariffs will not immediately cause great damage to either side’s economy. The EU does not rely on the U.S. as a market for its steel exports as much as Canada or Mexico, which are also being hit by the U.S. tariffs and stand to lose more.
However, experts say the risk that the sides could keep adding tariffs could hurt business confidence, weighing indirectly on the economy.
The EU, which is the world’s biggest trading bloc, has taken its case to the World Trade Organization. If the WTO rules in its favor, or after three years if the case is still going on, the EU plans to impose further tariffs of $4.1 billion on U.S. products.
Trump has also escalated his tariff threats against China, which Republican senators told Ross was triggering dangerously rising prices in agriculture over fears of retaliation.