U.S. mulling tariffs on global steel and aluminum imports

The United States has fired a warning shot in what could become a global trade war over steel and aluminum, threatening to impose a wide range of tariffs and quotas within several months on an undetermined number of countries. Canada has reason to follow this closely. It is the biggest international exporter of both steel and aluminum to the United States, so it has a significant stake in whatever President Donald Trump decides to do with a series of recommendations he received Friday.

A range of punitive options have been suggested to Trump by his administration.

One would see the U.S. impose a 24 per cent tariff on steel imports from everywhere — Canada included. Another option is a 53 per cent tariff on a smaller list of countries that does not include Canada, but does include Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam.

A third option is limits on imports through quotas. And, finally, a fourth option is for Trump to simply ignore Friday’s recommendation, or do something else entirely. The president must choose a course of action by April.

U.S. Commerce Secretary Wilbur Ross announced the recommendations Friday, after invoking a provision in U.S. trade law that allows the president to take punitive actions if it’s a matter of national security.

Ross has employed a loose definition of national security. To him, it’s not just about having enough steel to build tanks. It’s also about roads, and bridges and the economic well-being of American workers.

“National security is a very broadly encompassing topic,” Ross said.

He also spelled out the potential consequences for America’s No. 1 trading partner. In short, Canada’s situation is now in the president’s hands: “If (Trump) goes the targeted route, Canada would be excluded,” Ross told a conference call. “(But) the blanket-tariff alternative and the blanket-quota alternative would target all countries...

“(Trump) will decide what he’s going to do... He is not bound by these recommendations... He could do something totally different — or do nothing.”

The recommendations released Friday also include aluminum. The president is being asked to consider a 7.7 per cent tariff on all aluminum exports from all countries, or a 23.6 per cent tariff on just a few countries: China, Hong Kong, Russia, Venezuela and Vietnam.

Ross said he anticipates other countries might fight back: “It wouldn’t surprise us if there were (retaliation).”

In preparing its recommendations Friday, the administration heard repeated warnings about potential unintended consequences. For example, in its testimony, one group involved in the international steel trade shared a cautionary tale about oil.

He described how 1960s U.S. quotas on oil pushed then-ally Venezuela into the arms of Middle Eastern competitors, leading them to create the OPEC.