Trump Postpones Steel Tariff Decision for EU, Other U.S. Allies

President

Donald Trump

has decided to postpone decisions about imposing steel and aluminum tariffs on the European Union and other U.S. allies until June 1, a senior administration official said.

In addition to announcing the delay, the White House is expected to say Monday evening that it has finalized a deal to exempt South Korea from the tariffs, mirroring details that have been previously released by the U.S. Trade Representative’s office.

The remaining decisions on tariffs will be decided later, the official said.

A White House spokeswoman declined to comment.

The U.S. initially imposed world-wide tariffs of 25% on U.S. steel imports and 10% on aluminum in March, but it temporarily exempted several U.S. allies from the tariffs. Monday’s decisions extend that delay.

Extensions for Canada and Mexico were widely expected, but it was uncertain whether the U.S. would proceed with tariffs on Europe May 1 as scheduled.

A midnight deadline loomed Monday for a decision.

The U.S. is in the midst of talks with Canada and Mexico to rewrite the North American Free Trade Agreement. Monday’s decision to delay tariffs on U.S. metals imports buys the sides time in those Nafta negotiations.

Extensions were also granted to Argentina, Brazil and Australia, which are also in talks with the U.S. about metals trade.

Threats of tariffs are aimed at easing pressure on the U.S. steel and aluminum industries, which has been buffeted in recent years by cheap import competition. A glut of production from China found its way through global markets into the U.S., despite U.S. barriers.

Trade hawks in the Trump administration see implementation against a wide range of trading partners as a way to wall off the U.S. domestic industry from these global forces.

The tariffs are already affecting China, Japan, Russia and others.

The European steel industry has already felt the fallout. Big exporters to the U.S.—countries like Brazil, Turkey, Russia, South Korea, Egypt and China—have ramped up exports to the European market to avoid American trade barriers, dragging down prices for domestic producers.

Steel imports in the EU rose 300,000 metric tons to 2.9 million tons in the first quarter of 2018, versus the year-earlier period, according to Eurofer, a trade group representing all European steelmakers.

The European Commission, the bloc’s antitrust regulator, is considering whether to impose safeguards to prevent a surge of imports.

“We are already seeing now the trend toward massive trade redirections into the open, European market,” said Hans Jürgen Kerkhoff, president of the German Steel Federation.

Many firms have natural hedges: big operations in the U.S. In Spain, leading stainless steel manufacturer

Acerinox
SA

said it is worried about prices in the European market but has also seen some benefits. Acerinox makes 40% of its revenue in the U.S. through its North American Stainless unit, based in Kentucky. Acerinox says it has a 35% share of the American stainless steel market.

Still, back home in Europe, Acerinox said “the increased imports are placing a great deal of pressure on prices.”

Write to Michael C. Bender at Mike.Bender@wsj.com and William Mauldin at william.mauldin@wsj.com

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