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U.S. Exempts Allies From Steel and Aluminum Tariffs U.S. Exempts Allies From Steel and Aluminum Tariffs
(about 2 hours later)
WASHINGTON — The United States trade representative, Robert Lighthizer, said on Thursday that several American allies would initially be exempt from blanket steel and aluminum tariffs that are to take effect shortly. WASHINGTON — Even as it prepares to start collecting tariffs on imported steel and aluminum, the Trump administration moved Thursday to provide exemptions to a big group of trading partners, at least for now.
Speaking at a meeting of the Senate Finance Committee, Mr. Lighthizer said that the European Union, along with Argentina, Australia, Brazil and South Korea, would be exempted. Canada and Mexico were earlier left off the list of countries subject to the tariffs. The United States trade representative, Robert Lighthizer, told the Senate Finance Committee that the European Union, along with Argentina, Australia, Brazil and South Korea, would be exempt. Canada and Mexico were earlier left off the list of countries subject to the tariffs.
“The idea that the president has is that, based on a certain set of criteria, some countries should be out,” Mr. Lighthizer said. “What he has decided to do is pause the implementation of the tariffs in respect to those countries.”“The idea that the president has is that, based on a certain set of criteria, some countries should be out,” Mr. Lighthizer said. “What he has decided to do is pause the implementation of the tariffs in respect to those countries.”
His remarks will provide relief for the exempted countries, which have been lobbying hard in recent weeks to win a reprieve from the tariffs. President Trump’s administration had justified the restrictions on national security grounds, and were due to implement them on Friday. His remarks will provide relief for the exempted countries, which have been lobbying hard in recent weeks to win a reprieve from the tariffs. The spate of exemptions was the clearest indication yet that the sweeping tariffs were, in fact, aimed primarily at Beijing.
If Mr. Trump does follow through and exempt all of those countries from the tariffs permanently, some of the largest foreign suppliers of steel to the United States will not be subject to them. In total, the countries Mr. Lighthizer listed, together with Canada and Mexico, account for more than half of the total volume of steel sold to the United States in 2017. That could make the tariffs less helpful to domestic steel mills. The administration is expected to put the restrictions into effect on Friday.
The countries Mr. Lighthizer listed, together with Canada and Mexico, account for more than half of the $29 billion in steel sold to the United States in 2017. That could make the tariffs less helpful to domestic steel mills.
One trading partner and ally was prominently missing from the list: Japan, which sent about $1.7 billion in steel mill products to the United States last year, according to IHS Markit Global Trade Atlas. Without an exclusion, it will be the only one of the top six foreign suppliers of steel to the United States to face steep tariffs.
Japanese steel makers argue that they hardly compete with American steel mills, because they make niche, specialized products that are not replicated here, rather than undercutting prices by flooding the market with a cheap commodity.
Tadaaki Yamaguchi, chairman of the Japan Steel Information Center, a New York-based trade group, said failing to give Japan the same exemption that was extended to South Korea and Brazil was “an outrage and a travesty.”
If the exempted countries are not subject to any export limits, the administration may need to raise tariffs on all the others if it wants to keep its promise to protect American producers on price. That would hit Japan harder than anyone.
The leaders of several countries with close ties, including military alliances, with the United States had warned that the restrictions could touch off a trade war and undercut a global economic recovery. They also argued that the tariffs would be mutually destructive and ignore the complexity of modern supply networks.The leaders of several countries with close ties, including military alliances, with the United States had warned that the restrictions could touch off a trade war and undercut a global economic recovery. They also argued that the tariffs would be mutually destructive and ignore the complexity of modern supply networks.
For example, the German carmaker BMW operates its largest factory anywhere in the world in Spartanburg, S.C., buying about two-thirds of the steel it needs in the United States and importing the rest. BMW is also the largest exporter of cars made in the United States, with China being one of the main buyers, said Harald Krüger, the company’s chief executive. “None of this would be possible without free trade,” Mr. Krüger said at a news conference in Munich on Wednesday. For example, the German carmaker BMW operates its largest factory in Spartanburg, S.C., buying about two-thirds of the steel it needs in the United States and importing the rest. BMW is also the largest exporter of cars made in the United States, with China being one of the main buyers, said Harald Krüger, the company’s chief executive. “None of this would be possible without free trade,” Mr. Krüger said at a news conference in Munich on Wednesday.
The spate of exemptions for allies was the clearest indication yet that the sweeping tariffs were, in fact, aimed primarily at Beijing.
In announcing the tariffs this month, the White House had said the measures were being taken to protect national security, which officials argued was being compromised by cheap metals flooding into the United States from abroad, degrading the American industrial base. But Mr. Trump made no secret that his main concern was China, singling out the country as a top offender in an effort to curb what he has called unfair trade practices.In announcing the tariffs this month, the White House had said the measures were being taken to protect national security, which officials argued was being compromised by cheap metals flooding into the United States from abroad, degrading the American industrial base. But Mr. Trump made no secret that his main concern was China, singling out the country as a top offender in an effort to curb what he has called unfair trade practices.
In particular, the president expressed concern that Chinese metals were coming into the United States through other countries, a process called “transshipping.” Administration officials say Chinese steel is often processed into a new product and then routed through another country before hitting American shores. In particular, the president expressed concern that Chinese metals were coming into the United States through other countries, a process called transshipping. Administration officials say Chinese steel is often processed into a new product and then routed through another country before hitting American shores.
One reason the White House may not have just imposed tariffs on Chinese steel is that previous trade measures have already significantly reduced the amount of the metal coming directly from that country. The United States has imposed 24 trade remedies against steel from China, more than any other country, covering an estimated 90 percent of Chinese imports.One reason the White House may not have just imposed tariffs on Chinese steel is that previous trade measures have already significantly reduced the amount of the metal coming directly from that country. The United States has imposed 24 trade remedies against steel from China, more than any other country, covering an estimated 90 percent of Chinese imports.
Mr. Trump also plans to announce at least $50 billion worth of annual tariffs and other restrictions on China, targeting what the White House says is theft of technology and trade secrets. Mr. Trump said Thursday that he would impose about $60 billion worth of annual tariffs and other restrictions on China, focusing on what the White House says is theft of technology and trade secrets.
Mr. Lighthizer’s remarks on Thursday came after a visit to Washington by Cecilia Malmstrom, the European Union’s top trade official, during which she pushed for an exemption for the 28-nation bloc, the United States’ biggest trading partner.Mr. Lighthizer’s remarks on Thursday came after a visit to Washington by Cecilia Malmstrom, the European Union’s top trade official, during which she pushed for an exemption for the 28-nation bloc, the United States’ biggest trading partner.
Steel and aluminum accounts for a relatively small percentage of trade between Europe and the United States. But there is widespread fear among European businesses that the tariffs would provoke a worsening trade conflict.Steel and aluminum accounts for a relatively small percentage of trade between Europe and the United States. But there is widespread fear among European businesses that the tariffs would provoke a worsening trade conflict.
Antonio Tajani, the president of the European Parliament, said that Mr. Lighthizer’s remarks were “a piece of news that is in the right direction.” Lars Lokke Rasmussen, the Danish prime minister, added in a tweet that “rather than threatening to raise tariffs against one another” the European Union and United States “should work together to solve the real problem of overcapacity.”Antonio Tajani, the president of the European Parliament, said that Mr. Lighthizer’s remarks were “a piece of news that is in the right direction.” Lars Lokke Rasmussen, the Danish prime minister, added in a tweet that “rather than threatening to raise tariffs against one another” the European Union and United States “should work together to solve the real problem of overcapacity.”
There are already signs that the tensions have had an impact. A closely watched survey of business sentiment by the Ifo Institute in Munich, which was published on Thursday, showed that German managers had become less optimistic. The survey is “a strong signal that recent trade war threats are the main worry of German businesses,” Carsten Brzeski, an economist at ING, said of the report.There are already signs that the tensions have had an impact. A closely watched survey of business sentiment by the Ifo Institute in Munich, which was published on Thursday, showed that German managers had become less optimistic. The survey is “a strong signal that recent trade war threats are the main worry of German businesses,” Carsten Brzeski, an economist at ING, said of the report.
European Union officials have already drawn up plans to retaliate against the United States by imposing reciprocal tariffs on a range of goods including pleasure boats, frozen corn and digital flight recorders.European Union officials have already drawn up plans to retaliate against the United States by imposing reciprocal tariffs on a range of goods including pleasure boats, frozen corn and digital flight recorders.
Often, the targeted goods come from places that voted heavily for Mr. Trump.Often, the targeted goods come from places that voted heavily for Mr. Trump.
Playing cards, which are on the list, are an example. The United States Playing Card Company, which supplies casinos around the world, is based in Erlanger, Ky., in a county that voted for Mr. Trump by a nearly 2-to-1 margin.Playing cards, which are on the list, are an example. The United States Playing Card Company, which supplies casinos around the world, is based in Erlanger, Ky., in a county that voted for Mr. Trump by a nearly 2-to-1 margin.
The tariffs could also have unintended consequences. At least in the short term, they could drive down steel prices in Europe. Producers in countries like Brazil and South Korea would divert steel from the United States to other markets, increasing the supply.The tariffs could also have unintended consequences. At least in the short term, they could drive down steel prices in Europe. Producers in countries like Brazil and South Korea would divert steel from the United States to other markets, increasing the supply.
In theory, at least, lower prices would provide a cost advantage to companies in Europe compared with their American competitors.In theory, at least, lower prices would provide a cost advantage to companies in Europe compared with their American competitors.
“If the steel prices are lower,” said Gabriel Felbermayr, an economist at the Ifo Institute, “that is always good for the consumers.”“If the steel prices are lower,” said Gabriel Felbermayr, an economist at the Ifo Institute, “that is always good for the consumers.”