Donald Trump signs order on metal tariffs but Canada, Mexico get reprieve

Trump holds up a proclamation during a White House ceremony to establish tariffs on imports of steel and aluminum.
Trump holds up a proclamation during a White House ceremony to establish tariffs on imports of steel and aluminum.PHOTO: REUTERS

WASHINGTON - US President Donald Trump has signed an order imposing a 25 per cent tariff on imported steel, and 10 per cent on imported aluminium, in a bid to protect the US’ aluminium and steel industry. The tariffs are to take effect in 15 days.

But the President walked back from an earlier proposal to apply the tariffs across the board - which had sparked global fears of a trade war.

The order exempted Canada and Mexico - both major sources of imports. It also leaves room for other countries to negotiate exclusions from the new tariffs.

“We have to protect & build our Steel and Aluminum Industries while at the same time showing great flexibility and cooperation toward those that are real friends and treat us fairly on both trade and the military,” Mr Trump tweeted earlier on Thursday (March 8).

He told reporters as he signed the order, flanked by selected steel and aluminium workers holding their hard hats : “Our industries have been targeted for decades by unfair trade practises. That’s going to stop. We are finally taking action to correct this long overdue problem.”

“It’s been an assault on our country," he said. "Other countries have added production capacity that far exceeds demand, flooding the world with cheap metal. It takes China about one month to produce as much steel as is produced in the United States in an entire year.”

The exemptions to Mexico and Canada appear to be conditioned on the two countries agreeing to terms favourable to the US, in ongoing renegotiation of the North American Free Trade Agreement (NAFTA) which Mr Trump has blamed for job losses in American manufacturing.

If NAFTA negotiations are unsuccessful then tariffs will be applied across the board, Dr Peter Navarro, Director of the White House National Trade Council told Fox News.

“Now, importantly, in addition to that, there is language that will allow other countries to effectively propose ways that they could get a similar dispensation in exchange for more fair and reciprocal trade with the United States,” he said.

The tariffs are being imposed in the name of national security. But they are also in line with Mr Trump’s long-held protectionist beliefs, and fulfill a promise to steel workers to protect them.

And they are also aimed at China, which while exporting a relatively small amount of steel and aluminium directly to the US, accounts for roughly half of world steel supply.  

“Global excess capacity fuels the importation of steel and aluminum into the United States,” the White House said in a statement.

“Global excess steel capacity has reached 737 million metric tons. In 2016, China’s excess aluminum production alone totaled 3.9 million metric tons, more than four times that of US production. International efforts to address this problem have been insufficient,” it said.

America’s steel and aluminium industry currently employs about 140,000. The trend has been downward. Employment in iron and steel mills and ferroalloy production has dropped by more than 54,000 since the beginning of 2000, the White House said.  More than 40,000 jobs in alumina and aluminum production have been lost since the beginning of 2000.

Despite considerable growth in demand, six primary aluminum smelters have permanently shut down since 2012, the White House said. The loss of skilled steel and aluminum workers... would be problematic in the event of a major production surge or mobilization, it said.

America’s steel industry had been “decimated during the past decades by steel imported into our country at lower prices than domestic manufacturers can sustain,” the statement said.

The United States imported five times as much primary aluminum as it produced in 2016. Aluminum and steel is used in a range of ground weapons, ships and aircraft.

“There is only one remaining U.S. producer of an important category of steel used in electrical transformers, a type of critical infrastructure and only one high volume producer of armor plate,” it said.

“There is only one high-volume producer of the high-purity aluminum needed for defense aerospace applications,” it added.

The tariff decision has caused ripples of concern globally, and at home where there is fear the price of steel will rise and in the longer run, cost American jobs in steel- and aluminium-dependent sectors.

But it has been welcomed by the steel industry. On Wednesday one company, Pittsburgh-based US Steel, announced it would reopen a blast furnace and resume steel making at a plant in Illinois, bringing 500 former employees back to work two and a half years after they were idled.

In a statement on its website dated March 3, another steel manufacturer, ArcelorMittal USA, said: “We believe the remedies will provide the additional measures required to ensure the competitiveness of the steel industry in the US.”