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US President Donald Trump has declared he will impose tariffs on steel and aluminium imports, dramatically raising the possibility of a trade showdown with China and other key trading partners.
Key points:
- There will be a 25 per cent tariff on steel and 10 per cent on aluminium imports
- China largely blamed for global glut of steel
- Industry executives welcome move, but there are doubts in Congress
Mr Trump summoned steel and aluminium executives to the White House and told them that next week he would levy penalties of 25 per cent on steel and 10 per cent on aluminium imports.
Those tariffs, he said, would remain for "a long period of time".
But it was not immediately clear if the tariffs would exempt certain trading partners.
"What's been allowed to go on for decades is disgraceful. It's disgraceful," Mr Trump told executives gathered in the cabinet room.
"You will have protection for the first time in a long while and you're going to regrow your industries."
News of the tariffs drove the stocks of US domestic steel and aluminium makers sharply higher, but also hit sentiment on Wall Street due to the potential impact of higher costs on consumers.
The Dow Jones industrial average lost more than 400 points.
EU, Canada quick to hit back
China has already threatened to curb imports of US soybeans in retaliation, while the European Union said it would propose countermeasures within days.
"We strongly regret this step, which appears to represent a blatant intervention to protect US 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."
It is unclear if Australian companies, which export about $270 million worth of steel and $275 million of aluminium to the US each year, will be hit by the tariffs.
Canada, which supplies 16 per cent of US demand and is by far the largest steel exporter followed by Brazil and South Korea, was also quick to issue a sharply worded response.
"Should restrictions be imposed on Canadian steel and aluminium products, Canada will take responsive measures to defend its trade interests and workers," Canadian Foreign Affairs Minister Chrystia Freeland said.
Although China only accounts for 2 per cent of US steel imports, its massive industry expansion helped produce a global glut of steel that has driven down prices and hurt US producers, creating a situation the Commerce Department calls a national security threat.
Critics of the tariffs fear other countries will retaliate or use national security as a pretext to impose trade penalties of their own.
They also argue sanctions on imports will drive up prices and hurt US carmakers and other companies that use steel or aluminium.
The US oil and gas industry, which relies on imported steel for drilling equipment, pipelines, liquefied natural gas terminals and refineries, slammed the move.
"We are urging the administration to avoid killing US jobs through a steel tariff that impacts pipelines," Andy Black, chief executive of the Association of Oil Pipe Lines, said.
Announcement caught top White House officials off guard
Plans for Mr Trump to make an announcement had been thrown into doubt earlier in the day because of internal wrangling over the decision.
The possibility of an announcement on an issue overseen by Commerce Secretary Wilbur Ross and White House trade adviser Peter Navarro caught some top White House officials off guard and left several aides scrambling for details.
One person with direct knowledge of the discussions described a night of "chaos" in the White House due to frequent switching of positions.
Key Senate offices also did not receive notice that Mr Trump was expected to announce a decision before the April deadlines.
The tariffs announcement came at the end of an eventful week at the White House, which included the resignation of communications director Hope Hicks and clashes between Mr Trump and his Attorney-General Jeff Sessions.
Many Congress members were also surprised on Wednesday by Mr Trump's defiance of the National Rifle Association (NRA) and fellow Republicans in pushing for tougher gun control laws.
Announcement met with doubt in Congress
Mr Trump met more than a dozen steel and aluminium executives, who urged the President to act, saying they had been unfairly hurt by a glut of imports and foreign countries circumventing trade rules.
"We are not protectionist. We want a level playing field," US Steel president and chief executive officer Dave Burritt said.
"It's for our employees, to support our customers, and when we get this right it will be great for the United States of America. We have to get this done."
But the announcement was received warily in Congress.
House Speaker Paul Ryan said through a spokesman he hoped Mr Trump would "consider the unintended consequences of this idea and look at other approaches before moving forward".
Politicians raised concerns it could launch a trade war that could hurt other industries.
"Every time you do this, you get a retaliation and agriculture is the number one target," said Senator Pat Roberts, Republican chairman of the Senate Agriculture Committee.
"I think this is terribly counterproductive for the ag economy."
Mr Trump tweeted earlier on Thursday that many US industries, including steel and aluminium, "have been decimated by decades of unfair trade and bad policy with countries from around the world".
"We must not let our country, companies and workers be taken advantage of any longer. We want free, fair and SMART TRADE!"
The President had until April 11 to make a decision on steel and until April 19 to decide about aluminium.
The Commerce Department had recommended tariffs on all steel and aluminium imports, higher tariffs on imports from specific countries, or a quota on imports.
AP/Reuters
Topics: trade, international-aid-and-trade, business-economics-and-finance, industry, steel, world-politics, united-states
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