Politics

Allies, Lawmakers Brace for Fallout of Steel, Aluminum Tariffs

“‘Make America Great Again’ shouldn’t mean ‘Make America 1929 Again,’” Sasse says

Canadian Prime Minister Justin Trudeau, here at the Capitol in 2016, said it was “simply ridiculous” to see trade with his country as a threat to U.S. national security. (Bill Clark/CQ Roll Call file photo)

Mexico, Canada and the European Union threatened to retaliate with tariffs on American-made goods after the Trump administration announced that it would reimpose steel and aluminum tariffs, as it tries to pressure them to crack down on imports of the metals from China, Commerce Secretary Wilbur Ross said Thursday.

The tariffs will take effect Friday. U.S. companies that import steel from Canada, Mexico and the 28-nation EU will pay an additional 25 percent duty on steel and a 10 percent duty on aluminum.

The administration rejected the EU’s position that it should be permanently excluded from the tariffs as a U.S. ally and similar arguments from Canada and Mexico, who are the top U.S. trading partners. Ross said the United States “is quite willing and indeed eager to have further discussions with those parties” to address the administration’s concerns on trade deficits and China’s overproduction of steel and aluminum flooding the global market, lowering global prices and competing with the U.S. steel and aluminum industries.

The White House issued orders to revoke the exemptions on steel and aluminum and finalized steel and aluminum quotas for Argentina and Australia. Brazil will get a steel quota but there is no agreement on its aluminum exports.

“The problem of China is not just direct shipments from China but also potential transshipments through other countries with or without some modification of the product. That’s a fundamental reason this had to be wide-ranging,” Ross said.

Reaction from lawmakers, allies and industries facing higher costs because of the tariffs was swift.

“Bad news that [President Donald Trump] has decided to impose taxes on American consumers buying steel and aluminum from our closest allies — Canada, the EU, and Mexico (with whom we run a trade surplus on steel),” Pennsylvania Republican Sen. Patrick J. Toomey tweeted. “In addition to higher prices, these tariffs invite retaliation.”

Tennessee Sen. Lamar Alexander warned that his state’s economy could be hurt by the tariffs.

“This is a big mistake. These tariffs will raise prices and destroy manufacturing jobs, especially auto jobs, which are one third of all Tennessee manufacturing jobs,” the Republican senator said in a statement. “I have urged President Trump to focus on reciprocity — do for our country what our country does for you — instead of imposing tariffs, which are basically higher taxes on American consumers.”

House Ways and Means Chairman Kevin Brady said the tariffs “are hitting the wrong target.” The Texas Republican added that “the administration will need to come to Capitol Hill to provide answers about the indiscriminate harm these tariffs are causing our local businesses.” It was unclear if Brady will call a hearing or hold a closed-door meeting with Trump officials.

“This is dumb. Europe, Canada, and Mexico are not China, and you don’t treat allies the same way you treat opponents,” Nebraska GOP Sen. Ben Sasse said. “We’ve been down this road before — blanket protectionism is a big part of why America had a Great Depression. ‘Make America Great Again’ shouldn’t mean ‘Make America 1929 Again.’”

Industry groups expressed similar sentiments.

“Ending the exemptions for our trade allies will only lead to more uncertainty in the aluminum market,” said Jim McGreevy, president of the Beer Institute. “The price of aluminum had already skyrocketed since President Trump announced tariffs on aluminum, meaning increased prices for America’s more than 5,000 active brewers and importers.”

“We have every reason to believe U.S. agriculture, including the products we represent, will be among the first hit by counter measures from our trading partners,” Tom Sleight, president of the U.S. Grains Council, said in a statement. The council develops foreign markets for the sale of barley, corn, sorghum and distiller’s dried grains. “These countries are among our closest neighbors and friends. We have spent years building markets in these countries based on a mutual belief that increasing trade benefits all parties,” Sleight said.

ICYMI: Trump Signs Steel and Aluminum Tariffs

Trump used two executive orders in April 2017 to direct the Commerce Department to investigate the national security threat of steel and aluminum imports under Section 232 of the Trade Expansion Act of 1962. The department concluded that foreign-made steel and aluminum are economic and national security threats and that imports have forced domestic plants to close and made the U.S. increasingly dependent on steel and aluminum imports for commercial and military uses.

Trump provided temporary exemptions to Canada and Mexico conditioned on their willingness to make concessions in the ongoing talks to renegotiate the North American Free Trade Agreement.

Allies retaliate

The administration’s actions leaves the United States subject to retaliatory tariffs. The European Union threatened to impose its own tariffs on products such as Kentucky bourbon and Harley Davidson motorcycles — products made in the respective home states of Senate Majority Leader Mitch McConnell and Speaker Paul D. Ryan.

Jean-Claude Juncker, president of the European Commission, said the United States was making a mistake by ending the exemptions.

“By targeting those who are not responsible for overcapacities, the US is playing into the hands of those who are responsible for the problem,” Juncker said in a statement. “The US now leaves us with no choice but to proceed with a [World Trade Organization] dispute settlement case and with the imposition of additional duties on a number of imports from the US. We will defend the Union’s interests, in full compliance with international trade law.” The EU has compiled a long list of US products that it could hit with tariffs.

Canadian Foreign Affairs Minister Chrystia Freeland said Thursday her country will retaliate with tariffs of up to $16.6 billion on U.S. steel, aluminum and other American imports. That’s the amount of Canadian exports of steel and aluminum to the U.S., she said.

She added that there will be 25 percent tariffs on some U.S. products and 10 percent on others. The Canadian tariffs will take effect on July 1 and will remain in place as long as the U.S. tariffs are in effect. Canada, she said, will consider a list of U.S. products that could face tariffs but a final list will emerge after a public comment period.

Canadian Prime Minister Justin Trudeau blasted the U.S. tariff action in a series of tweets Thursday. “It is simply ridiculous to view any trade with Canada as a national security threat to the US and we will continue to stand up for Canadian workers & Canadian businesses,” he said.

Trudeau added that the Canadian countermeasures were “not about the American people.”

“Americans remain our partners, friends, and allies. … We have to believe that at some point their common sense will prevail. But we see no sign of that in this action today by the US administration,” he said. 

Mexico, meanwhile, said it will “adopt equivalent measures on a variety of products, including flat steel (hot and cold foil, including coated and tubes and pipes), lamps, pork legs and shoulders, sausages and food preparations, apples, grapes, cranberries, various cheeses, and others products, up to an amount comparable to damage caused by the United States’ action.”

Ross, in a call with reporters, said Canada, Mexico and the European Union individually do not constitute threats to the United States but the administration wants them to adopt tougher measures to limit their imports of Chinese-made steel that in turn is used in products they sell to the United States.

“The question of what is the overall impact of the overall oversupply situation in both steel and aluminum relative to those industries, relative to national defense and relative to the national economy,” Ross said. “We take the view that without a strong economy, you can’t have a strong national security.”

Using that definition, Ross said national security concerns overrode any progress or lack of progress in the U.S. talks with Canada and Mexico in renegotiating NAFTA.

“NAFTA is a series of trade negotiations. It’s just that the status which they got did not justify continuing exemptions from the tariffs based on the national security considerations of the overall situation,” he said.

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