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American Shipper

Trump delays Section 232 tariffs for allies

The administration has reached agreements with South Korea, Argentina, Australia and Brazil regarding the imposition of tariffs on imports of steel and aluminum and extended negotiations with Canada, Mexico and the European Union until June 1.

   President Donald Trump on Monday delayed the imposition of his administration’s controversial tariffs on imports of steel and aluminum for key U.S. allies in order to continue negotiating deals that could see those countries exempted entirely.
   The White House said in a statement that the administration has finalized such an agreement with South Korea regarding the steel tariffs, negotiated agreements in principle with Argentina, Australia and Brazil with respect to both steel and aluminum, and also has extended exemption negotiations with Canada, Mexico and the European Union for an additional, “final” 30 days.
   First announced in early March, the Trump administration’s global tariffs on steel and aluminum sparked widespread opposition both at home and among U.S. trading partners.
   Analysts speculated at the time that the global imposition of a 25 percent tariff on steel and 10 percent tariff on aluminum may have been a negotiating tactic designed to kickstart discussions on trade and appear to make concessions by exempting key allies.
   As a result of the backlash, the administration granted temporary exemptions for the EU, as well as Canada and Mexico, pending the outcome of the ongoing NAFTA renegotiation talks.
   Those tariff exemptions were scheduled to be lifted as of Tuesday, but the latest proclamations from the president give negotiators until June 1 to reach a deal.
   According to the White House statement, the administration is shifting its focus in these deals from making steel and aluminum imports more expensive to limiting the amount of those imports via quotas.
   “In all of these negotiations, the administration is focused on quotas that will restrain imports, prevent transshipment and protect the national security,” the White House said. “These agreements underscore the Trump administration’s successful strategy to reach fair outcomes with allies to protect our national security and address global challenges to the steel and aluminum industries.”
   EU officials, however, seemed less than pleased with the decision to continue negotiations on the tariffs.
   The European Commission said in a statement that the extension “prolongs market uncertainty, which is already affecting business decisions,” adding that the union “should be fully and permanently exempted from these measures as they cannot be justified on the grounds of national security.
   “Overcapacity in the steel and aluminum sectors does not originate in the EU,” the commission said. “On the contrary, the EU has over the past months engaged at all possible levels with the U.S. and other partners to find a solution to this issue.
   “The EU has also consistently indicated its willingness to discuss current market access issues of interest to both sides, but has also made clear that, as a longstanding partner and friend of the U.S., we will not negotiate under threat. Any future transatlantic work program has to be balanced and mutually beneficial.”
   According to Richard Chriss, president and international counsel for the American Institute for International Steel, the Trump administration’s latest move “likely will result in 30 more days of uncertainty, accusations, and price increases for U.S. manufacturers.
   “Companies depend on a reliable global supply chain for the steel and aluminum they need to make their products, compete around the world, and employee many thousands of people in our country,” he said in a statement. “Furthermore, these short-term extensions add additional complications to already delicate NAFTA negotiations that are placing in question our strongest and most profitable trading partnerships.
   “We are disappointed that the President did not act last night to end the uncertainty in the metals market by ending the threat of tariffs on steel and aluminum,” said Chriss. “Our member companies are already seeing prices spike by more than 30 percent for steel and delivery times have more than tripled in many cases. That’s because a tariff—or the threat of a tariff—on the imports of a product not only raises the price of the imported product, but also allows the domestic industry to raise the price of its products.”
   Chriss noted that U.S.-based producers do not make enough steel to meet domestic demand and many do not produce the specific types of steel used by U.S. manufacturers.
   “The result is that these manufacturers will pay more for steel and aluminum in the U.S. than anywhere in the world,” he said. “U.S. manufacturers will therefore lose business to overseas competitors, who pay global market prices for these important inputs and can therefore manufacture and import end products and component parts with significant content of steel and aluminum into U.S. markets at a much lower cost than they can be made by U.S. manufacturers.”
   He further argued that the administration’s shift in focus from tariffs to quotas would have similar negative effects on the U.S. market.
   “Quotas are not the solution as they will have the same impact as tariffs by restricting access to, and raising the price of, steel and aluminum for U.S. manufacturers,” said Chriss. “We call on President Trump to enter into global negotiations about overcapacity for steel and aluminum before these trade wars cost tens of thousands of U.S. jobs.”

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