Trump’s steel tariff blow

The Trump Administration has been pondering three ways to support the country’s steel industry, and none of them have been very appealing to shipowners. The three options were:

1. A tariff of at least 25% on all steel imports from all countries
2. A tariff of at least 53% on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, South Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to the United States
3. A quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States

In the end, Trump plumped for Option 1, possibly because its simplicity made it the most Twitter-friendly. The hostile reaction from its trading partners was entirely predictable, with little credence given to the stated reason of needing domestic steel supply for its tanks and warships.

Such reactions have seldom deterred the present administration, but the horse trading has begun in earnest.

Canada is the largest steel exporter to the US, followed by Russia, Brazil, the EU and Mexico. Canada and Mexico have already secured exemptions on tariffs, but with a warning that their exemptions could be withdrawn if they tranship foreign steel into the US while passing it off as their own. The EU has won an exemption, but only till May, as have Australia, Argentina, Brazil and South Korea. That leaves Russia, Brazil and Turkey among its top trading partners to deal with the tariff issue. Most of them have already threatened to retaliate.

China – whose cheap exports have destabilised steel industries across the globe – can expect few concessions, so its response will be based on retaliation. Beijing is already threatening action against US technology companies operating in China, hoping that they will put pressure on Washington. Cars, agricultural products and ethanol are on Beijing’s hit-list.