European Steel Adds to Chorus of Disapproval: Tariffs Update
(Bloomberg) -- After President Donald Trump said the U.S. plans to impose 25 percent tariffs on steel imports and 10 percent on aluminum, the shock waves are being felt around the world. Asia’s up in arms, Canada’s pushing back, and there are plenty of forecasts that U.S. consumers are set to pay a whole bunch more for all sorts of purchases. Think beer cans to autos.
European Union Nations Exposed to Steel Tariffs: Map
While the exact form of the curbs remains unclear -- especially whether U.S. allies will win exemptions -- the reaction on Friday from outside the world’s biggest economy has been largely negative. Beyond metals, the biggest risk is a tit-for-tat trade war, which draws in other products, possibly foods. We’re following developments here. The time-stamps are New York.
European Steel Lobby Pushes Back (4:46 a.m.)
Trump’s move could have a “huge impact” on the industry, according to Axel Eggert, the director general of Europe’s steel lobbying group Eurofer. Steelmakers are concerned that product destined for the U.S. could now be diverted. While China’s overcapacity has caused problems in the global steel industry, Europe, as one of the U.S.’s closest allies shouldn’t be targeted too, Eggert said in a Bloomberg Television interview.
Arcelor Says Cooperation Needed to Fix Steel Glut (3:21 a.m.)
ArcelorMittal just added its voice to the debate and the tone is finely balanced. Governments have a legitimate reason to use a “tough approach” to address unfair trade practices amid significant overcapacity in the steel industry, the producer said. “The greater need, however, is to create a truly sustainable global steel industry, and the only way to do this is for steel-producing nations around the world to work together to address global overcapacity.”
National Security Excuse Not Constructive: Norway (2:14 a.m.)
European nations are now pitching in too, and Norway’s remarks amplify what may prove to be the Achilles’ Heel of this whole thing -- what national-security risks is Trump actually pointing to in trade flows, especially when metal comes from your friends and allies? National security as an excuse for protectionism is not constructive, Norway’s Foreign Ministry said. The White House got this far by using Section 232 of the Trade Expansion Act of 1962, which permits the government to explore whether imports undercut national security. Earlier today, the Japanese made much the same observation.
Moody’s Says Canada, Bahrain May Be Most at Risk (1:28 a.m.)
Moody’s Investors Service is weighing in, and it picks out Canada and Bahrain as the top losers, should they get caught in Trump’s net, according to Managing Director Marie Diron. At this stage, while there’s no significant impact on the credit profiles of sovereigns, there was an important warning. “Longer term, tariffs on steel and aluminum could signal a marked deterioration in global trade relations to the extent that they are followed by other measures from the U.S. and potential responses from other countries.”
Tariffs Could Trigger U.S. Smelter Restarts (10:25 p.m.)
Trump’s push may mean U.S. aluminum smelters get a good deal busier. There’s about 490,000 tons of idled capacity in the U.S. that could potentially restart, according to Mike Ferraro, who cites Harbor Intelligence data. Ferraro is head of Melbourne-based Alumina Ltd., a producer of alumina and bauxite. Operations that could lift output include plants in Missouri, Kentucky, and Washington state. However, some shuttered capacity is high-cost, so it’s unclear how much of an impetus the tariffs will prove to be, Ferraro said.
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