US may impose tariffs on metal imports from China, other nations


The United States Department of Commerce recently released its recommendation that the federal government should impose tariffs or quotas on the importation of aluminum and steel. The Commerce Department “found that the quantities and circumstances of steel and aluminum imports threaten to impair the national security,” Secretary Wilbur Ross said Friday, Feb. 16, according to Bloomberg. Foreign-imported metals could pose a threat to the ability of U.S. born manufacturers to make armored vehicles, aircrafts and other such machinery for the military.

Ross proposed a global tariff of 24 percent on steel imports and 7.7 percent on aluminum imports for President Donald Trump to consider. Other options include a 53 percent tariff on steel imports from Brazil, China, Costa Rica, Egypt, India, Malaysia, South Korea, Russia, South Africa, Thailand, Turkey and Vietnam.

Some other quota options included a by product quota on steel imports for all other countries equal to 100 percent of their 2017 exports, a quota up to 63 percent of their 2017 exports and an aluminum quota of 86.7 percent of 2017 exports, according to Bloomberg.

Trump has until mid-April to decide on a course of action. Any of these actions could assist domestic metal manufacturers in remaining competitive with foreign imports.

The announcement led to gains in metal prices, as well as in shares of Alcoa Corp., Century Aluminum Co. and United States Steel Corp.

Trump has spoken repeatedly about his desire to impose tariffs. During a meeting with Congress members, the president stated that he was convinced imposing tariffs would “create a lot of jobs.” He disregarded any notion that tariffs would hurt more than they would help by causing higher costs for companies, as others have warned.

“I want to keep prices down but I also want to make sure that we have a steel industry and an aluminum industry and we do need that for national defense,” Trump said, according to the Financial Times. “If we ever have a conflict we don’t want to be buying steel [from] a country we are fighting.”

Trump is facing resistance from some Republicans, who fear that imposing steel tariffs could result in equal retribution from China and other countries. An increase in tariffs could also impact consumer prices of goods such as beer cans and cars.

As a result, beverage companies and carmakers have joined Republican lawmakers in opposing Trump’s tariffs, claiming that they would threaten U.S. manufacturing jobs, cause prices to rise and profits to fall. Following the Commerce Department’s recommendation, the stocks of Ford Motor Co. and General Motors Co. dropped.

On the other hand, U.S. steel companies and steelworkers have pushed for Trump to keep his promise and protect their industry. “This is a step in the right direction, and hopefully the president responds sooner than later,” said Todd Leebow, the chief executive of Majestic Steel USA, Inc., which buys U.S. steel from mills to sell to customers in construction, agriculture and other industries, according to The New York Times.

If the United States does impose tariffs on these universal commodities, China, the world’s largest producer of steel and aluminum, seems poised to retaliate.

China has claimed that the United States already has excessive protections on domestic iron and steel products and that it reserves the right to retaliate, according to Bloomberg.

“If the United States’ final decision affects China’s interests, we will take necessary measures to defend our rights,” said Wang Hejun, a senior official at the Ministry of Commerce People’s Republic of China, according to a report on Saturday, Feb. 17 by Xinhua News Agency according to the United Press International.

China has been accused of dumping cheaply produced steel and aluminum at low prices. The high quantity of cheap steel imports depresses the price for steel in the United States, and as a result many U.S. steel and aluminum plants are struggling to compete in what is now an oversaturated market. They have had to scale back the production of metal and lay off workers.

However, the Ministry of Commerce People’s Republic of China said that the reports claiming that the nation is threatening U.S. national security are baseless.

In January, Trump imposed 30 percent tariffs on imports of solar panels and washing machines, which heavily impacted China, as China produces the largest number of solar panels worldwide.

When these tariffs became public knowledge, China announced it would investigate U.S. exports of sorghum, an agricultural product, and impose a tariff on styrene, a material used to make plastic products.

Imposing metal tariffs could also inflate manufacturing and consumer prices in the United States. This could create a rift between the United States and countries such as Japan, India, Germany and Canada. In the past, the G20, or Group of Twenty, have stood against steel tariffs, since such policies could instigate a trade war.