Some business leaders in the steel industry and unions such as United Steelworkers have been pressuring President Trump to keep his promise and address imported steel and aluminum. Last week marked an important first step to implementing tariffs on these vital goods. The U.S. Commerce Department revealed its recommendation for the U.S. to impose tariffs or quotas on aluminum and steel imports. It’s beginning to look like these trade measures may soon become a reality.
Secretary Wilbur Ross said on Friday (2/16/18) that [The U.S. Commerce Department] “found that the quantities and circumstances of steel and aluminum imports threaten to impair the national security.” (https://bloom.bg/2BzjJkF) This announcement caused a reaction in the market, sending share prices of Alcoa Corp., Century Aluminum Co. and U.S. Steel Corp higher.
Ross proposed a 24% global tariff on steel shipments coming to the United States and a 7.7% duty on any aluminum imports. President Trump could use these recommendations but also has the opportunity to sit down with producers to find the best solutions possible for the industry. Using a section of the 1962 Trade Act law, the president has the power to enact any tariffs without approval from Congress if they pose a threat to national security. He will have until mid-April under this section of the trade law to decide if any action will be taken.
The U.S. Commerce Department also provided alternatives besides the recommendation listed above.
These alternatives were listed on Bloomberg Markets:
- At least a 52% tariff on steel imports from Brazil, China, Costa Rica, Egypt, India, Malaysia, Korea, Russia, South Africa, Thailand, Turkey, Vietnam, with a quota by-product on steel imports from all other countries equal to 100% of their 2017 exports to the U.S.
- Quota on steel imports from all countries up to 63% of their 2017 exports to the U.S.
- For aluminum, a 23.6% tariff on metal when it comes from China, Russia, Venezuela and Vietnam and Hong Kong
- An aluminum quota of 86.7% of 2017 exports
Many still fear how China will react if duties are placed on steel and aluminum imports. China is the world’s largest producer of these products and causing a trade war could be a lose-lose for everyone involved. Furthermore, China isn’t the only target of these recommended tariffs. Global import duties on steel and aluminum could cause tensions with countries like Japan, India, Germany and Canada as well. Even some lawmakers from the Republican party are worried that these trade measures could threat U.S. manufacturing jobs.
As of now, these are just recommendations and an official decision has yet to be made. President Trump has been outspoken about his stance on putting American manufacturers first but with so many concerns surrounding duties on steel and aluminum imports, determining what exactly should be done will require careful consideration.
Be sure to keep checking back on MFGTalkRadio.com to follow along with these developments. A decision to impose duties and tariffs on aluminum and steel imports could have a monumental impact on the U.S. manufacturing industry.