US businesses have appealed for the Trump administration to clear up uncertainty over its tariffs on steel and aluminium, after the White House announced a substantial rollback of plans unveiled by the president at the start of the month.
The rules as implemented on Friday exempted EU members and six other countries from the new tariffs of 25 per cent on steel and 10 per cent on aluminium, until May 1st. The excluded countries include Canada, Brazil, Mexico and South Korea, the four largest exporters of steel to the US last year. About 67 per cent of US steel imports and 55 per cent of aluminium imports come from the exempted countries, according to the American Action Forum think tank.
The exemptions were welcomed by steel and aluminium using industries, which had warned that the tariffs would raise costs and cause job losses in sectors such as manufacturing, construction and energy.
Shares in steelmakers Nucor, US Steel and AK Steel, which had risen in response to US president Donald Trump's original tariffs announcement, had by Friday dropped back to their lowest levels this year. Shares in Century Aluminum, the company that has been the most vocal advocate of aluminium tariffs, also fell sharply as news of the proposed exemptions started to emerge.
However, the White House has said it will “closely monitor” imports of steel and aluminium from the exempted countries, and could impose quotas “as appropriate” to limit those sales. It also said Mr Trump retained the right to further modify the tariffs at any time, including by ending the exemptions or by exempting additional countries.
Michael Bless, chief executive of Century Aluminum, said he was confident that the administration was "heading in the right direction" to put in place a system that would restrict imports and allow closed US aluminium smelters to reopen. Century is investing $100 million and hiring about 300 people to bring back to full capacity a smelter in Kentucky, currently operating at just 40 per cent of its maximum potential output.
“Given our confidence, we are voting with our pocket books,” Mr Bless said. “They are following through on their stated obligations, and we are going to follow through on ours.”
Alcoa, the New York-listed aluminium group which also has operations outside the US, welcomed the tariff exemptions, but urged the administration to "expedite negotiations to remove uncertainty and make those exemptions permanent". It also asked the government to exempt other "fair-trading partners".
The Association of Oil Pipe Lines, representing an industry that is a large user of steel, said it was “encouraged” by what it saw as a growing appreciation in the administration of the importance of imports for investment and employment in the US, but added that it would “want to see that both country and product exemptions are lasting and effective at protecting American jobs”. It pointed out that pipeline projects worked on timetables much longer than the five-week deadline set by the administration for extending or ending the exemptions.
Since Mr Trump announced the planned tariffs on March 1st, industries that use steel and aluminium, and producing countries, have been lobbying the administration intensively for relief from the tariffs. The American Petroleum Institute (API), the oil industry group, this month put together a high-powered delegation, including the chief executives of ExxonMobil and Chevron, to go to the White House to discuss issues including trade.
The API said on Friday that while it was encouraged by the country exemptions from the steel and aluminium tariffs, “we want to continue to emphasise the need for a more flexible and transparent exclusion process” to reduce the burden on US businesses.
- Copyright The Financial Times Limited 2018