President Trump’s Plan To Tariffs On All Steel, Aluminum Imports—What’s The Latest?
In a meeting last Thursday, President Donald Trump announced that, as a result of his administration’s Section 232 investigations, he will impose a 25 percent tariff on all steel imported into the United States and a 10 percent tariff on all imported aluminum. These tariffs are slightly higher than the 24 percent and 7.7 percent tariffs the U.S. Department of Commerce recommended in its Section 232 reports.
Canadian and Mexican government officials, and officials from other nations, immediately criticized the president’s plan. Canadian Prime Minister Justin Trudeau and foreign minister Chrystia Freeland both called the tariffs “absolutely unacceptable.” Before the president made his announcement, Bloomberg reported that the Mexican government planned to retaliate if the United States imposes tariffs on its exports.
On Friday, news outlets reported that an unnamed senior adviser to the president said the administration would not exempt allies like Canada from the tariffs. Discussing the president’s announcement on television Sunday, White House trade adviser Peter Navarro seemed to indicate that as well, but then in a post on Twitter Monday, the president suggested he would exempt Canada if “new and fair NAFTA agreement is signed.” The White House also reportedly will hold a meeting this Thursday, March 8 with companies that consume steel and aluminum to discuss the potential effects of the tariffs.
As a reminder, MSCI submitted written testimony to the U.S. Commerce Department regarding the agency’s Section 232 investigation in May 2017. It submitted testimony with regard to the aluminum investigation in June 2017. The steel testimony is available here and the aluminum testimony is here. MSCI’s overriding goal in submitting these comments was to preserve a healthy source of supply and demand for the entire North American metals sector. Both submissions argued the U.S. metals sector has been harmed by unfair trading practices. However, MSCI focused on China as the main culprit and the driving force behind oversupply in general. In the steel testimony, for example, MSCI requested “metal imports from our NAFTA partners, Canada and Mexico, should be expressly excluded from any trade penalties as a result of this investigation …”
MSCI focused on circumvention in both submissions as well. For example, in the aluminum testimony, MSCI wrote, “The U.S. government … has rightfully imposed tariffs on various metals from countries that it has deemed to be unfairly subsidizing its metal exports to the U.S. However, there is growing evidence that, in an attempt to circumvent those rightfully imposed duties, the Chinese and others are simply processing that same aluminum into aluminum parts.”
In both submissions, MSCI asked that the Trump administration to:
- Take care not to upset the U.S. steel and aluminum sectors’ relationships with their trading partners in other countries, including Canada and Mexico;
- Provide the same relief for domestic producers that are downstream in the supply chain as it currently does for upstream domestic producers when foreign countries unfairly subsidize their products;
- Before imposing penalties, give the industries the time they need to “invest in and establish necessary domestic production capability”;
- Monitor and provide public reports on imports of substrate metals that are subject to tariffs, as well as imports of downstream products that are produced from those substrate metals that are subject to tariff.
The White House will reveal additional details about the tariffs this week.
In related news, last Wednesday, the Office of the United States Trade Representative (USTR) released the Trump administration’s 2018 Trade Policy Agenda, which is required by law. The policy agenda contains five major elements:
- Supporting national security, including by preserving U.S. national sovereignty, responding to economic competitors, such as China, and recognizing the importance of technology;
- Strengthening the U.S. economy;
- Negotiating better trade deals (including an improved North American Free Trade Agreement), negotiating with countries of the Trans-Pacific Partnership, expanding trade with the United Kingdom, and extending Trade Promotion Authority;
- Aggressive enforcement of U.S. trade laws by using “all tools available – including unilateral action where necessary”; and
- Strengthening the multilateral trading system, including by working with the World Trade Organization (WTO) to counter WTO members that flout WTO rules.