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US steel and aluminium imports face big tariffs, Trump says

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President Donald Trump has said he will sign off on steep tariffs on steel and aluminium imports next week, hitting producers like Canada and China.

He said steel products face a 25% tariff, with 10% on aluminium goods.

Mr Trump tweeted that the US was suffering from “unfair trade”. But the move has hit US markets, with the Dow Jones index down more than 2%.

The US imports four times more steel than it exports, and is reliant on steel from more than 100 nations.

The value of shares in American steel manufacturers jumped significantly after the announcement.

The news is likely to provoke an angry reaction from China, and analysts have expressed fears of the prospect of new trade wars.

Why now?

During his presidential campaign, Mr Trump said that foreign countries were “dumping vast amounts of steel all over the United States, which essentially is killing our steelworkers and steel companies”.

And since taking office, Mr Trump said cheap imports from China were harming the viability of industry in the US, which is the world’s biggest importer of steel.

China isn’t the only country to export the material to the US – 110 countries and territories do so. And China is only the 11th biggest exporter to the US – Canada, Brazil, South Korea, Mexico and Russia are the five biggest.

Last year, the president ordered an investigation by Secretary of Commerce Wilbur Ross into “whether steel imports threaten to impair the national security”, drawing a link between economic prosperity and the country’s security.

Mr Ross’ report was published last month – it recommended the president impose tariffs.

What did Trump have to say?

In Thursday’s announcement, Mr Trump promised to rebuild the American steel and aluminium industries, which he said had suffered “disgraceful” treatment from other countries for decades.

“And when it comes to a time when our country can’t make aluminium and steel – and somebody said it before and I will tell you – you almost don’t have much of a country, because without steel and aluminium your country is not the same.

“We need great steel makers, great aluminium makers for defence.”

Citing China, Mr Trump said “we haven’t been treated fairly by other countries”.

He spoke as Chinese economic adviser Liu He, a friend of Chinese President Xi Jinping, visited the White House.

Mr Trump’s announcement was slightly delayed on Thursday amid reports of internal wrangling over the issue among White House aides.

More than a dozen metals executives, including representatives from US Steel Corp, JW Aluminum, Century Aluminum, Arcelor Mittal, Nucor, joined him as he made the announcement.

But officials from industries that rely on steel use have lobbied against the tariffs as they fear increased costs if they have to use more US-made metals.

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Trade war in the White House

By Tara McKelvey, BBC White House reporter

The president wants to be seen as tough on trade and China, and so do many of his top officials: Pete Navarro, a trade adviser who’s tipped for promotion, has hawkish views.

So does Harry Harris, the president’s pick for ambassador to Australia. Still, some advisers thought the president should take it slow.

Aides huddled behind closed doors and in a hallway on Thursday morning, and the president’s announcement was postponed.

The scheduling conflict reflected a bigger clash: a fight between hardliners and those who approach trade in a more cautious manner.

Meanwhile, the boss was right where he liked to be: in the eye of the storm, and everyone was waiting for him to speak.

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What’s the state of the US steel industry?

The US Department of Energy says the industry is recovering after a slump in the wake of the 2008 financial crisis.

But it is an industry significantly weaker than it was at the turn of the millennium. Industry statistics show that in the year 2000, the US produced 112m tons of steel – a figure that had fallen to 86.5m tons in 2016.

In 2000, 135,000 people were employed in the industry – a figure that fell to 83,600in 2016.

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What happens now?

Analysis by Natalie Sherman, BBC News business reporter, New York

The threat of tariffs on steel and aluminium has hovered around the Trump administration for months, with delays making the president vulnerable to criticism that he is all bark and no bite, despite his America First message.

He’s now silenced those mutters and handed a victory to the steel industry.

But the chaos surrounding Thursday’s announcement – in which advisers apparently hoped to dissuade the president from action – underscores just how many more losers there may be.

During the run-up to the decision, dozens of companies in industries that range from car-making to construction warned of hundreds of thousands of lost jobs, as higher prices raise costs for steel-dependent sectors such as manufacturing.

Defence Secretary Jim Mattis advised that the move would cost the US support among its allies, such as Canada and South Korea.

The European Union, Mexico and China have all said they are weighing retaliatory tariffs that would strike politically sensitive industries such as agriculture.

The last time the US imposed steel tariffs, in 2002, former President George W Bush lifted them less than two years later to avoid a damaging trade war.

Steel executives told the president on Thursday that they trust his judgement. But if a trade war is the outcome of this decision, as analysts expect, it remains to be seen how many will agree.

bbc.com

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