March 18, 2018

US Trading Partners, Businesses Say Trump's Tariffs Will Backfire

09 March 2018, 08:21 | Virginia Santiago

US Trading Partners, Businesses Say Trump's Tariffs Will Backfire

European Commissioner for Trade Cecilia Malmstroem speaks during a media conference at EU headquarters in Brussels on Wednesday

Less than a half hour before President Donald Trump announced at the White House he meant to tack on new tariffs to aluminum and steel coming into the United States, House Speaker Paul Ryan was at a Home Depot in Atlanta telling employees there he was still trying to persuade Trump to scale back his plan.

Australian Prime Minister Malcolm Turnbull said on Friday he is hopeful of securing an exemption from US tariffs on steel and aluminium after sustained lobby effort by his government. Coming on the same day that 11 USA allies - but not the U.S. - sign a landmark Asia-Pacific trade agreement, the move on tariffs only underscores Trump's embrace of the protectionist policies he believes helped him win the presidency. At least for now.

If both America's friends and foes are already complaining about U.S. trade restrictions, the situation could become rapidly worse in the coming months.

"We'll wait to see whether there's a time for negotiation - that's why I'm going to Washington next week".

Here's a closer look at what Trump's action does, how it would work and whether it's likely to succeed. Then, on March 1, he announced that he would impose tariffs on imported steel and aluminum.

The White House, however, says that the national security rationale for the move is "unassailable" and national security considerations are allowed under WTO rules.

The dollar fell against most currencies after the original announcement about the tariffs, last week, falling to a more than two-year low versus the yen.

There are about 1,100 pounds of steel and 400 pounds of aluminum in the average two-ton United States vehicle, according to the Center for Automotive Research, an industry think tank in Ann Arbor, Michigan.

The new tariffs are set to take effect in 15 days. Obviously we're in IN, we have two steel plants.

Canada, America's neighbor to the north, was its single-largest source of steel a year ago, followed by Brazil, South Korea, Russia, Mexico, Japan and Germany.

In making the long-awaited announcement Thursday, Trump says the US industry has been "ravaged by aggressive foreign trade practices". It's really an assault on our country. But if the tariff measure is a warning shot to China, it is viewed as falling short while alienating voters at home and allies overseas. The United States imported just shy of $1 billion in Chinese steel in 2017, or 3.35 percent of the United States' almost $30 billion annual steel import market, according to Commerce Department data.

China continues to overproduce steel and aluminum to keep growing its economy and employing millions of Chinese workers. Trump struck an unusually optimistic tone on the fate of the North American Free Trade Agreement, but repeated his threat to quit the pact if the talks fall short.

The Administration had come under intense pressure to exempt Canada.

Analysts have called the justification "an absurdity".

The president says he will exempt Canada and Mexico as "a special case" while negotiating for changes to the North American Free Trade Agreement.

She also downplayed a link made by Trump between NAFTA and the metals tariffs, saying they were separate issues.

President Donald Trump reaches out to shake the hand of Dusty Stevens a superintendent at Century Aluminum Potline during an event in the Roosevelt Room of the White House in Washington Thursday
US Trading Partners, Businesses Say Trump's Tariffs Will Backfire

Renegotiations over NAFTA began last summer. We have many tools in our toolkit and tariffs are one of them.

In one alleged example of haphazard policy-making, a report this week said the president raised the tariff rates for branding purposes, increasing them from the 24 and 7 per cent recommended by the Department of Commerce - because he wanted nice, round numbers.

The references to security are critical.

"We can take some comfort in the criteria for exclusion being a defence ally without a trade surplus with the United States of America, a criteria which Australia clearly meets", Mr Willox said on Friday.

Won't the exemptions weaken protections for U.S. manufacturers? Cheap foreign steel and aluminum have flooded the global market in recent years, devastating the domestic industry, leaders said. How that'll be interpreted is anyone's guess, but aluminium can makers, pipeline builders and auto companies are now building their cases for why the tariffs shouldn't apply to them.

How will U.S. trading partners likely respond?

"When will you do the decent thing and come to the House to made a statement?".

"So this hits home for all of us in Hawesville", said Dusty Stevens, who noted that his factory in Kentucky is running at a 40 percent capacity right now.

By giving countries a potential sanctuary from tariffs, Trump might have temporarily lowered the temperature.

Economic analysts warn that a trade dispute sparked by the tariffs could damage communities that backed the president in 2016.

Some countries are likely to take the U.S. to court, arguing that the decision violates World Trade Organization rules.

The Port of New Orleans, however, could be another loser under the tariffs.

Trump said the "aggressive" foreign trade amounted to an "assault" on the U.S., but that he would also show flexibility with friendly countries, possibly removing tariffs for some.

China described it as a "serious attack" on the system of worldwide trade.

The White House said Wednesday that Mexico, Canada and other countries may be spared from tariffs under national security "carve-outs".

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