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President Trump says he will order 25 percent tariffs on steel imports

March 1, 2018 GMT

President Trump says he will order 25 percent tariffs on steel imports

WASHINGTON -- President Donald Trump said today he will impose an import tax, or tariffs, of 25 percent on foreign steel brought into the United States.

But left out of the president’s statement are a lot of details. Will the tariffs apply to imports from all countries? On all kinds of steel?

Full answers are likely to emerge but Trump said the formal announcement will come next week. He mentioned tariffs of 25 percent on steel imports, and 15 percent on aluminum imports, during a White House “listening session” with executives from steel and aluminum companies. Tim Timken, of Canton-based Timken Steel, was among those present, as were executives from ArcelorMittal and AK Steel, all with operations in Ohio.

“We’ll be signing it next week,” Trump said during part of the session that was open to a press pool. “And you’ll have protection for a long time in a while. You’ll have to regrow your industries, that’s all I’m asking.”

American steelmakers have complained for years that companies in countries with lower wages, lower labor standards and weak environmental policies violate the rules of free trade by exporting volumes of steel in such quantities as to undermine the market here. Some companies get additional support from their governments, helping them further reduce their costs.

This has made steel more affordable and abundant for end users, from car and appliance makers to fabricators who fashion products after buying steel on the global market. They warn that protectionism from Trump will push up consumer prices and force some job movement from the United States.

Protection for steel could drive up downstream prices

But the steel and aluminum industries say that without protections such as new tariffs or import quotas, they cannot guarantee a viable steel- and aluminum-making industry in the United States.

Trump’s comments seemed to take industry groups and members of Congress by surprise, and they scrambled at midday to try to learn details.

But it appeared that Trump was delivering news the steel industry wanted. Trump has said since campaigning for president in 2016 that he would help beleaguered steel workers and their communities, suggesting a point of agreement he had even with people who were not his natural allies, such as Ohio U.S. Sen. Sherrod Brown of Ohio.

“This welcome action is long overdue for shuttered steel plants across Ohio and steelworkers who live in fear that their jobs will be the next victims of Chinese cheating,” Brow said today. “President Trump must follow through on his commitment today to save American steel jobs and stop Chinese steel overcapacity from continuing to infect global markets. If we fail to stand up for steel jobs today, China will come after other jobs up and down the supply chain tomorrow.”

Trump, Brown and the steel companies say theirs more than a competitive concern, and Commerce Department agrees. It is a national security concern, they say, because if the United States must rely on foreign steel to make planes, ships and weapons, that steel supply could be in jeopardy if hostilities break out among this country’s trading partners.

Some lawmakers have cautioned that military use accounts for only 3 percent of the nation’s steel consumption. But Trump says that share will grow with his plans to modernize the nation’s defenses.

The actions Trump will take fall under a national security provision of U.S. trade law. The Commerce Department recently recommended several possible action under that provision. The alternatives presented were:

A global tariff of at least 24 percent on all steel imports from all countries.

A tariff of at least 53 percent on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by product on steel imports from all other countries equal to 100 percent of their 2017 exports to the United States.

A quota on all steel products from all countries equal to 63 percent of each country’s 2017 exports to the United States.

The president’s mention of 25 percent tariffs suggests he may have picked the first option. But a truly global tariff risks litigation and possible retaliation from some of this country’ most trusted trade partners such as Canada. It is possible Trump will list exceptions when he formally announces his actions.

A number of Republican lawmakers including Sen. Rob Portman of Ohio have urged Trump to take a targeted approach. They mention two types of domestic steel most in need of protection: pipes and tubes used in extracting oil and gas, and electrical steel, which has particular qualities needed for transformers and the electrical grid.

The senators cited these in a meeting last month with Trump because, they said, large quantities of steel pipe and tube that used to come from China now come from Korea. They say they believe Korea is merely a stopover point, used to disguise the steel’s true origin, and that this poses a viability problem for domestic tube and pipe makers.

They say electical steel imports are problematic because only one company, AK Steel, even makes it in the United States now, and this could create a true national security problem. AK make electrical steel in western Pennsylvania and has a processing plant in Zanesville, Ohio.