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Trump says U.S. to impose hefty tariffs on steel, aluminum imports

Trump says U.S. to impose hefty tariffs on steel, aluminum imports

Postby smix » Thu Mar 01, 2018 8:54 pm

Trump says U.S. to impose hefty tariffs on steel, aluminum imports
Reuters

URL: https://www.reuters.com/article/us-usa- ... SKCN1GD4ZW
Category: Business
Published: March 1, 2018

Description: WASHINGTON (Reuters) - U.S. President Donald Trump announced on Thursday he would impose tariffs of 25 percent on imported steel and 10 percent on aluminum, in a move the administration said would protect U.S. industry, but which critics said would fail to boost jobs and risked stoking a trade war with China. Trump, speaking after a meeting with U.S. steel and aluminum makers said the duties would be formally announced next week. “We’re going to build our steel industry back and our aluminum industry back,” he said. News of the tariffs drove the stocks of U.S. domestic steel and aluminum makers sharply higher, but also hit sentiment on Wall Street due to the potential impact of higher costs on consumers. The move, which came after what one person with direct knowledge of the discussions described as a night of “chaos” in the White House due to frequent switching of positions in the administration, was sharply criticized by some senior Republican legislators. “Every time you do this, you get a retaliation. Agriculture is the number one target. I think this is terribly counterproductive for the agriculture economy,” said Senator Pat Roberts, who chairs the chamber’s agriculture committee. China has already threatened to curb imports of U.S. soybeans in retaliation, while the European Union has said it will consider action as well. China’s top trade official Lui He is in Washington for trade talks. After Trump’s statement, AK Steel Holding was up almost 12 percent, U.S. Steel Corp was up 8 percent and Nucor rose 3.6 percent. By contrast, industrial stocks such as Boeing fell, with traders citing tariffs, which would hit manufacturers’ costs. The administration says duties would protect U.S. industry, but critics say they would raise costs for industry and fail to deliver on a campaign pledge to boost domestic jobs. It had appeared unlikely that Trump would announce the tariffs on Thursday after a night of back and forth inside the administration. “There was a lot of movement within the past 12, 16 hours,” said the source who had knowledge of the discussions, but who declined to be named due to the sensitivity of the issue. Trump, speaking after a meeting with U.S. steel and aluminum makers said the duties would be formally announced next week. “We’re going to build our steel industry back and our aluminum industry back,” he said. News of the tariffs drove the stocks of U.S. domestic steel and aluminum makers sharply higher, but also hit sentiment on Wall Street due to the potential impact of higher costs on consumers. The move, which came after what one person with direct knowledge of the discussions described as a night of “chaos” in the White House due to frequent switching of positions in the administration, was sharply criticized by some senior Republican legislators. “Every time you do this, you get a retaliation. Agriculture is the number one target. I think this is terribly counterproductive for the agriculture economy,” said Senator Pat Roberts, who chairs the chamber’s agriculture committee. China has already threatened to curb imports of U.S. soybeans in retaliation, while the European Union has said it will consider action as well. China’s top trade official Lui He is in Washington for trade talks. After Trump’s statement, AK Steel Holding was up almost 12 percent, U.S. Steel Corp was up 8 percent and Nucor rose 3.6 percent. By contrast, industrial stocks such as Boeing fell, with traders citing tariffs, which would hit manufacturers’ costs. The administration says duties would protect U.S. industry, but critics say they would raise costs for industry and fail to deliver on a campaign pledge to boost domestic jobs. It had appeared unlikely that Trump would announce the tariffs on Thursday after a night of back and forth inside the administration. “There was a lot of movement within the past 12, 16 hours,” said the source who had knowledge of the discussions, but who declined to be named due to the sensitivity of the issue. “It was going to happen. It wasn’t going to happen and then it did happen.” The administration has also cited national security interests for its action, saying the United States needs domestic supply for its tanks and warships. Contrary to the action announced by Trump on Thursday, the Department of Defense had recommended targeted steel tariffs and a delay in aluminum duties. Although China only accounts for two percent of U.S. steel imports, its massive industry expansion has helped produce a global glut of steel that has driven down prices. Trade tensions between the United States and China have risen since Trump took office in 2017 and the administration is also pushing on what it regards as forced technology transfers to China. Shares of Asian steel producers such as South Korea’s POSCO and Nippon Steel fell overnight.
FEW MORE JOBS FROM TARIFFS
While American steelmakers have lost three quarters of their jobs between 1962 and 2005, a major study by the American Economic Association showed that much of this had been due to improved production technology as output per worker rose fivefold. “Thus, even if trade protection leads to increased domestic production, increases in employment may be far less than many hope,” a report from the highly-regarded independent Econofact economist network said last week.



EU promises firm response to U.S. steel tariffs
Reuters

URL: https://www.reuters.com/article/us-usa- ... SKCN1GD689
Category: Business
Published: March 1, 2018

Description: BRUSSELS (Reuters) - The European Union said it would propose countermeasures within days in response to the United States’ decision to impose hefty tariffs on steel and aluminum imports, which it called a “blatant intervention” to protect U.S. industry. U.S. President Donald Trump announced on Thursday he would impose duties of 25 percent on imported steel and 10 percent on aluminum imports to shield U.S. producers. “We strongly regret this step, which appears to represent a blatant intervention to protect U.S. domestic industry and not to be based on any national security justification,” European Commission President Jean-Claude Juncker said in a statement. “We will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk ... The EU will react firmly and commensurately to defend our interests.” Juncker said that the Commission would put forward a proposal for WTO-compatible countermeasures against the United States in the next few days to rebalance the situation. European steelmakers association Eurofer said a global tariff of 25 percent on steel imports meant the United States had chosen trade confrontation, rather than a quota that could have allowed allies to maintain their U.S. presence. “From one day to the next, EU steel exports to the U.S. - which were at 5 million tonnes in 2017 - will be cut drastically by an estimated 50 percent or more,” Eurofer Director Genereal Axel Eggert said in a statement. He said he welcomed the Commission’s announcement of appropriate and swift measures. “The EU must not allow that the moderate recovery in our industry over the last year is now being destroyed by the EU’s most important political ally,” Eggert said.



Canada says would retaliate against U.S. steel or aluminum tariffs
Reuters

URL: https://www.reuters.com/article/us-usa- ... SKCN1GD67P
Category: Business
Published: March 1, 2018

Description: OTTAWA (Reuters) - Canada will retaliate if the United States imposes tariffs on Canadian steel and aluminum products, Foreign Affairs Minister Chrystia Freeland said on Thursday after U.S. President Trump announced tariffs in a move he said would protect U.S. industry. “Should restrictions be imposed on Canadian steel and aluminum products, Canada will take responsive measures to defend its trade interests and workers,” Freeland said in a statement, calling any trade restrictions “absolutely unacceptable.” Canada buys more American steel than any other country, accounting for 50 percent of U.S. exports, and the steel and aluminum industry is highly integrated, supporting “critical North American manufacturing supply chains,” Freeland added. “The Canadian government will continue to make this point directly with the American administration at all levels,” she said. Trump said he would impose tariffs of 25 percent on imported steel and 10 percent on aluminum, in a move critics said would fail to boost jobs and risked stoking a trade war with China. Trump, speaking after a meeting with U.S. steel and aluminum makers, said the duties would be formally announced next week.



U.S. steel, aluminum stocks jump on tariff announcement
Reuters

URL: https://www.reuters.com/article/us-usa- ... SKCN1GD58E
Category: Business
Published: March 1, 2018

Description: (Reuters) - Shares of U.S. steel and aluminum companies posted solid gains on Thursday, while major manufacturers fell after President Donald Trump said his administration will impose tariffs on steel and aluminum imports next week. The overall market dropped, including a 1.3 percent decline for the benchmark S&P 500, after Trump, at a meeting with industry officials at the White House, said the United States will set tariffs of 25 percent on steel imports and 10 percent on imported aluminum. Among steel stocks, AK Steel Holding Corp gained 8 percent, while U.S. Steel Corp rose 6 percent. Nucor Corp climbed more than 3 percent while Steel Dynamics Inc gained more than 4 percent. Aluminum producer Century Aluminum Co’s shares rose 7 percent. A raft of U.S. industrial companies, which are major consumers of steel, saw their shares decline. Caterpillar Inc and Boeing fell by more than 2 percent, while crane maker Manitowoc Co fell by more than 6 percent. Automaker shares were lower, with General Motors down more than 4 percent and Ford off over 3 percent. The tariffs could increase not only imported steel prices, but also domestic steel prices, putting them at a competitive disadvantage vis-à-vis their non-U.S. competitors. “The industrial metal companies, the domestically focused ones, are probably going to benefit from this,” said Art Hogan, chief market strategist at B. Riley FBR in Boston. “In the longer run we’ve seen that tariffs generally don’t work and actually they generally hurt the economy. In the immediate to longer run it’s probably seen as a step towards trade wars (and) retaliation.” The Trump administration said the tariffs would protect U.S. industry, but critics said the moves would fail to boost jobs and risked stoking an angry response from China and other trading partners around the world. Trump, speaking after a meeting with U.S. steel and aluminum makers, said the duties would be formally announced next week. The U.S. Commerce Department had recommended last month that Trump impose steep curbs on steel and aluminum imports from China and other countries ranging from global and country-specific tariffs to broad import quotas.



U.S. energy industry slams Trump's 'job-killing' steel tariffs
Reuters

URL: https://www.reuters.com/article/us-usa- ... SKCN1GD652
Category: Business
Published: March 1, 2018

Description: HOUSTON/WASHINGTON (Reuters) - The U.S. oil and gas industry on Thursday slammed President Donald Trump’s plan to impose tariffs on imported steel, saying the move would kill energy jobs by raising costs for big infrastructure projects. Officials at the nation’s top energy industry trade groups issued statements urging Trump to drop the idea, and a source familiar with Exxon Mobil’s investment plans said the tariff could lead the company to curtail an expansion of one of the country’s biggest oil refineries. “These tariffs would undoubtedly raise costs for U.S. businesses that rely heavily on steel and aluminum for the majority of their products – and ultimately consumers,” said Jack Gerard, president of the American Petroleum Institute. He pointed out that the U.S. oil and gas industry relies on imported steel for drilling equipment, pipelines, liquefied natural gas terminals and refineries and said tariffs were being introduced “in the guise of national security concerns.” Pipeline trade groups noted that the cost for specialized steel needed to build arteries that carry crude oil and other products would rise. “We are urging the administration to avoid killing U.S. jobs through a steel tariff that impacts pipelines,” said Andy Black, CEO of the Association of Oil Pipe Lines (AOPL). Trump said on Thursday that he would move next to impose tariffs of 25 percent on steel imports and 10 percent on imported aluminum next week, in a move intended to protect U.S. industry. But critics said would fail to boost jobs and risked stoking a trade war with China. A study by AOPL last year showed that a 25 percent increase in pipeline costs could increase a typical project by $76 million, while major lines like TransCanada’s proposed Keystone XL expansion would cost at least $300 million more. A spokeswoman for the Interstate Natural Gas Association of America said the tariff could pose a problem because the type of pipe and the steel used to make thick-walled interstate pipelines are not available off the shelf domestically. Both groups said that about three-quarters of current pipeline project spending ends up in the pockets of American workers and business owners. The tariffs would have uncertain impacts on coal miners, who make up a portion of Trump’s base. Luke Popovich, a spokesman for the National Mining Association, said if tariffs boosted domestic steel making it would be a boon for some producers of metallurgical coal - used in steel mills. But metallurgical coal miners also export to markets in Asia, a business that has soared this year. If Trump’s tariffs resulted in a trade war with Asian countries, it could harm U.S. coal miners, Popovich said. The Trump administration has sought to support all sides of the fossil fuel industry, but that has at times led to squabbling between drillers and miners.
EXXON WOES
A source familiar with ExxonMobil Corp’s deliberations about a possible expansion of the Beaumont, Texas, refinery said an increase in steel prices could impact the company’s decision on adding a third unit for distillation of crude oil. The source also said the company could bypass duties on imported steel by importing the components of a crude unit directly from a manufacturer overseas into the refinery, which is a foreign trade zone. An Exxon spokeswoman was not immediately available to discuss the company’s plans. The Beaumont refinery currently can process 362,300 barrels of crude oil a day; a proposed expansion to 700,000 to 850,000 barrels a day would make it the nation’s largest. Meanwhile, a U.S.-based railcar manufacturing executive said the bulk of rail cars made in North America come from U.S. or Canadian steel and fears the tariffs will trigger a trade war that leads to higher domestic prices. Roughly 60 percent of the rail car cost comes from steel, said the executive, who was not authorized to speak to the press. “I am real concerned. I think this going to jack up prices and backfire,” the executive said. A trade group representing liquefied natural gas companies also expressed concern that the Trump administration’s plan to impose tariffs on steel could have the “unintended effect of endangering much-needed U.S. LNG export projects.”



Automakers among sectors reeling over U.S. steel, aluminum tariffs
Reuters

URL: https://www.reuters.com/article/us-usa- ... SKCN1GD6FH
Category: Business
Published: March 1, 2018

Description: (Reuters) - Shares of auto makers and other large steel and aluminum users in the United States tumbled on Thursday after President Donald Trump announced a plan to slap hefty tariffs on imports of the metals, which he said would protect U.S. industry. The announcement of tariffs of 25 percent on steel imports and 10 percent on imported aluminum rocketed through the stock market, taking a toll on industrial companies and aircraft manufacturers, as well as the auto makers, while driving up U.S. metals producers. Shares of the three major U.S. auto makers, which were already down due to weak numbers for U.S. new vehicle sales in February, took another leg down following Trump’s announcement. Shares of General Motors Co lost 3.9.7 percent, Ford Motor Co was down 3.0 percent and Fiat Chrysler Automobiles was down 2.8 percent. The Dow Jones Industrial Average closed down more than 400 points, or almost 1.7 percent. The tariffs would be hard to pass onto consumers amid flat to declining auto sales, said John Toohey, head of equities at USAA Asset Management Company in San Antonio, Texas, which has $166 billion in assets under management. ”Tariffs are sand in the gears of economic activity, and automakers are right at the top of the list,” he said, citing the sheer volume of steel and aluminum they use to produce vehicles. The auto sector accounted for 26 percent of demand for steel in the United States in 2017, behind the construction industry, at 40 percent of demand in 2017, according to data provider Statista. The energy sector was the third biggest user, at 10 percent. With the auto industry already facing a year of declining sales as interest rates rise, tariffs would be yet another blow, Toohey said. “Tariffs would be a big headwind for the auto industry,” he said. U.S. auto industry sales fell 2 percent last year to 17.23 million vehicles after hitting a record high in 2016. New vehicle sales are expected to drop further in 2018 despite a solid economy. Consumers could end up paying more for their cars and trucks, the American International Auto Dealers Association said. “These proposed tariffs on steel and aluminum imports couldn’t come at a worse time,” said AIADA President and CEO Cody Lusk. “Auto sales have flattened in recent months, and manufacturers are not prepared to absorb a sharp increase in the cost to build cars and trucks in America. The burden of these tariffs, as always, will be passed on to the American consumer,” Lusk said. The U.S. oil lobby also criticized the move, noting that its members rely on steel imports in drilling, on and offshore production, pipelines, liquefied natural gas terminals and refineries. U.S. natural gas trade groups said they are concerned the tariffs could delay or reduce new pipeline projects as well as dent exports of liquefied natural gas.
SHARES OF STEEL, ALUMINUM COMPANIES SURGE
Shares of U.S. steel and aluminum companies surged. Among steel makers, AK Steel Holding Corp jumped 9.5 percent, while U.S. Steel Corp rose 5.7 percent. Nucor Corp and Steel Dynamics Inc each gained more than 4 percent. Aluminum producer Century Aluminum Co’s shares rose 3.3 percent, while Alcoa Corp edged up 0.2 percent. U.S. industrial companies fell. Shares of construction and mining equipment maker Caterpillar Inc, plane maker Boeing Co and tractor maker Deere & Co all fell at least 2.5 percent. Last week, Caterpillar’s director of investor relations, Amy Campbell, said the majority of the steel that CAT uses for manufacturing comes from the United States. Yet, she expects the tariffs to pose a “challenge” as they would cause domestic steel prices to rise along with prices of imported steel, because the tariffs would give U.S. makers pricing power, putting Caterpillar at a competitive disadvantage vis-à-vis their non-U.S. competitors. “The industrial metal companies, the domestically focused ones, are probably going to benefit from this,” said Art Hogan, chief market strategist at B. Riley FBR in Boston, who saw the broad impact as negative, with a possible impact on the ongoing renegotiations of the North American Free Trade Agreement. “In the longer run we’ve seen that tariffs generally don’t work and actually they generally hurt the economy,” Hogan said. “In the immediate to longer run it’s probably seen as a step towards trade wars (and) retaliation. Negotiations with NAFTA could break down over this.”



Asia fears trade war after Trump plans hefty steel, aluminum tariffs
Reuters

URL: https://www.reuters.com/article/us-usa- ... SKCN1GE0AN
Category: Business
Published: March 2, 2018

Description: SEOUL/SYDNEY (Reuters) - U.S. President Donald Trump’s planned tariffs on steel and aluminum will distort global trade and cost jobs, Australia’s trade minister said on Friday, highlighting the risk of retaliatory measures as Asian exporters sought more detail on the plans. Fears of an escalating trade war hit the share prices of Asian steelmakers and manufacturers supplying U.S. markets particularly hard on Friday following a rough night on Wall Street. Trump said the duties of 25 percent on steel and 10 percent on aluminum would be formally announced next week, although White House officials later said some details still needed to be ironed out. “The imposition of a tariff like this will do nothing other than distort trade and ultimately, we believe, will lead to a loss of jobs,” Australian trade minister Steven Ciobo told reporters in Sydney. “My concern remains that on the back of actions like this we could see retaliatory measures that are put in place by other major economies. That is in no-one’s interest.” Australia, which has championed the free-trade Trans Pacific Partnership that Trump pulled the United States out of, has sought an exemption for its steel and aluminum to the United States, Ciobo added. Steel has become key focus for Trump, who pledged to restore the U.S. industry and punish what he sees as unfair trade practices, particularly by China. Although China only accounts for 2 percent of U.S. steel imports, its massive industry expansion has helped produce a global glut of steel that has driven down prices. “The impact on China is not big,” said Li Xinchuang, vice secretary-general of the China Iron and Steel Association. “Nothing can be done about Trump. We are already numb to him.” South Korea, the third-largest steel exporter to the United States after Canada and Brazil, said it will keep talking to U.S. officials until Washington’s plans for tariffs are finalised. “For us, the worst case scenario was a 54 percent tariff,” said a South Korean trade ministry official who declined to be named as he was not authorized to speak to media.“Still if the option for a global tariff of at least 24 percent is taken, that will still affect our steel exports to the U.S.” South Korean trade minister Kim Hyun-chong has been in the United States since Feb. 25, the trade ministry said. Kim has met U.S. Commerce Secretary Wilbur Ross and other officials to raise concerns over the so-called Section 232 probe and consider a plan that would minimize the damage to South Korean companies.
NATIONAL SECURITY?
Asian steelmakers fear U.S. tariffs could result in their domestic markets becoming flooded with steel products that have nowhere else to go. “We are concerned about how other exporters react, what will happen with steel that cannot be sold to the U.S.,” Vikrom Wacharakrup, Chairman of Iron and Steel Industry Group, Federation of Thai Industries, told Reuters. Thailand exports steel mainly to Asia but also the United States. The Trump administration also cited national security interests for its action, saying the United States needs domestic supplies for its tanks and warships. Contrary to the action announced by Trump on Thursday, the Department of Defense had recommended targeted steel tariffs and a delay in aluminum duties. “We continue to seek clarification,” said Japanese Trade and Industry Minister Hiroshige Seko.“I don’t think exports of steel and aluminum from Japan, which is a U.S. ally, damages U.S. national security in any way, and we would like to explain that to the U.S.” India also raised concerns about the use of the national security interests provisions. “We have only 2 percent of our exports to U.S. so no immediate dent, but validity of Section 232 is stretched to be used as tariff barrier,” India’s Steel Secretary Aruna Sharma told Reuters. Trump believes the tariffs will safeguard American jobs but many economists say the impact of price increases for consumers of steel and aluminum, such as the auto and oil industries, will be to destroy more jobs than they create. Japan’s Toyota Motor Corp said the tariffs would substantially raise costs and therefore prices of cars and trucks sold in America. News of the tariffs hit sentiment on Wall Street due to the potential impact of higher costs on consumers and the potential for damaging tit-for-tat retaliation by affected countries. Asian steelmakers suffered with shares in South Korea’s POSCO and Japan’s Nippon Steel & Sumitomo Metal Corp down more than 3 percent.
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