By IndraStra Global News Team
Stock exchanges in Asia closed the day with losses on Friday (March 2, 2018) and the financial market in Europe also suffered an impact in the morning, possibly as a result of the U.S. President Donald Trump's announcement that new tariffs are to be introduced on imported steel and aluminum i.e., a plan to impose a 25% tariff on steel imports and 10% on aluminium as a counter-measure under Section 232(b) of the Trade Expansion Act of 1962, which allows the U.S. to investigate if certain imports, or high levels of certain imports, pose a threat to national security.
The Dow slid 600 points in the hours following his statement on Thursday (March 1, 2018). The dip reflects the enormous impact of the announcement on American industries. More expensive steel and aluminum means higher costs for the American businesses that make these products — higher costs that will likely get passed on to consumers.
Yesterday, Japan's Nikkei stock exchange declined 2.5%, as China and Hong Kong-registered fall of 0.59% and 1.48% respectively. Shortly after the tariffs were unveiled, the effects were also felt by Wall Street itself, which slipped 400 points.
The decision made by Trump introduces tariffs adding up to 25% on foreign steel bought by the U.S. as of next week, according to the official communication from the White House. Aluminum imports will be tariffed 10%. The protectionist measure was advocated by Trump as key to strengthening the US metal industry.
“We're rebuilding our aluminum,” he stated. He accused other countries of “ruining national aluminum,” and blamed errors in the way the US themselves conducted policies in previous administrations.
DOMESTIC REACTIONS
Business Roundtable:
“Business Roundtable shares the President’s goal of addressing global overcapacity of steel and aluminum. We urge the President to pursue other approaches that target unfair traders without putting various parts of the economy at such high risk, such as strongly enforcing U.S. unfair trade laws.” Joshua Bolten, president of the influential Business Roundtable, said in a statement.
Global Automakers:
“Trade restrictions and higher prices will nullify many of the benefits we have seen from tax reform. Investments earmarked for new products and plants will instead be funneled to pay for rising steel and aluminum prices used in existing products and facilities,” said John Bozzella, President, and CEO of Global Automakers in a statement. “There are better ways to address concerns about the American steel and aluminum industries. It’s time to go back to the drawing board.”
American International Automobile Dealers Association:
“These proposed tariffs on steel and aluminum imports couldn’t come at a worse time,” said AIADA President and CEO Cody Lusk in a statement. “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. Car shoppers looking for a deal will instead find that they are paying a new tax to transport themselves and their families.”
National Retail Foundation:
“Make no mistake, this is a tax on American families. When costs of raw materials like steel and aluminum are artificially driven up, all Americans ultimately foot the bill in the form of higher prices for everything from canned goods to electronics and automobiles. The reality is that there is nothing this country will gain from such a one-sided policy. These tariffs threaten to destroy more U.S. jobs than they will create while sending an alarming signal to our trading partners and diminishing markets for American-made products overseas.” Matthew Shay, President, and CEO, National Retail Foundation, said in a statement.
INTERNATIONAL REACTIONS
International Monetary Fund (IMF)
IMF has joined criticism of Donald Trump's plan. The body warned that such a move would hurt the U.S. as well as other countries. It said others could follow the US president's precedent by claiming tough trade restrictions were needed to defend national security.
World Trade Organization (WTO)
In an extremely rare intervention into a WTO member's trade policy, World Trade Organization Director-General Roberto Azevedo expressed his concern on Friday. "The WTO is clearly concerned at the announcement of U.S. plans for tariffs on steel and aluminum. The potential for escalation is real, as we have seen from the initial responses of others," he said in a brief statement issued by the WTO. "A trade war is in no one's interests. The WTO will be watching the situation very closely."
Canada
Canadian officials pledged to respond to U.S. tariffs with their own measures. Canadian Trade Minister Francois-Phillippe Champagne said these tariffs would be "unacceptable." He pledged to defend Canadian workers in the steel and aluminum industry.
Chrystia Freeland, Canada's minister of foreign affairs, said these trade restrictions would hurt workers and manufacturers on both sides of the border. She said it is inappropriate for the U.S. to view any trade with Canada as a national security threat.
From 2013 to 2016, Canada was the largest source of aluminum imports to the U.S., according to a U.S. Geological Survey report. Canada also accounts for the largest share of U.S. steel imports, according to the International Trade Administration.
European Union
German Foreign Minister Sigmar Gabriel called for a "determined" response from the European Union to US President Donald Trump's decision to impose steep tariffs on steel and aluminum imports.
The EU "must respond with determination to US punitive tariffs that threaten thousands of jobs in Europe," Gabriel told newspaper Die Welt, saying there should be "no doubt in Washington" that a response would be forthcoming from Brussels.
Gabriel's comments came after European Commission chief Jean-Claude Juncker said yesterday that the EU would present "World Trade Organisation-compatible countermeasures against the US to rebalance the situation".
German industry groups are also very much critical.
The BDI German industry federation "supports the EU in its plans to offer an appropriate response", its president Dieter Kempf said in a statement. However, "there is too much at stake" to risk a trade war, he added.
The head of the DIHK German Chambers of Commerce, Martin Wansleben, warned that Trump's move "could jolt the entire world trade system," but called for the EU to work with other nations to offer only a "proportionate" response at the WTO.
"Especially the highly internationalized German economy depends on open markets," he pointed out.
China
China reacted with cautious criticism on Friday (March 2, 2018) to President Trump’s plan, urging the U.S. to abide by multilateral trade rules and do nothing to damage the fragile global economic recovery.
“China does not want to fight a trade war with the United States, but we absolutely will not sit by and watch as China’s interests are damaged,” Zhang, who is a spokesman for parliament and was formerly an ambassador to the United States, said.
“If policies are made on the basis of mistaken judgments or assumptions, it will damage bilateral relations and bring about consequences that neither country wants to see,” he said.
“What an extremely stupid move,” said Li Xinchuang, vice secretary general of the China Iron and Steel Association. “A desperate attempt by Trump to pander to his voters, which I think in fact runs counter to his ‘America First’ pledge.”
Li, who is also director of the China Metallurgical Industry Planning and Research Institute, said the tariffs would only make U.S. industries fall further behind globally at a time when “China is in its prime.”
India
“Two percent of our (steel) exports are to the US, so the dent may not be as big on us as it will be to China or the European Union. But the logic to put tariff under 232 is weird and hence our concerns,” India's Steel Secretary Aruna Sharma told ET. Citing steel imports as a threat to national security and “using that logic for the tariff is stretching the issue of security. The anti-dumping duties applicable in India are WTO compliant and prevent dumping but do not curtail steel imports as international business.” She said India’s exports to other countries will go up as a fallout of this move.
Brazil
Brazil's Ministry of Development, Foreign Trade, and Services believes that the curbs instituted by Trump on steel and aluminum will affect national exports from both products, which may lead to Brazil's challenging the démarche with international agencies.
In an official note, the ministry reported that the Brazilian government expects to reach an agreement with the U.S. to evade the tariffs. In case it proves inevitable, the country may challenge the move at global forums. “The Brazilian government does not rule out complementary measures, on multilateral and bilateral levels, to attempt to protect its interests in a concrete case like this,” the note read.
With reporting by Agencia Brasil., BBC, IMF, Reuters, Vox, and The Washington Post, .
