World braces for first real shot of Trump’s trade war
‘This would be beyond a trade war. You're talking about blowing up the WTO’
The US Commerce Department finally released its report on investigations into steel and aluminum imports on Friday, recommending wide-ranging tariffs and quotas on products coming into the United States.
It will be up to President Trump what he wants to do with the recommendations, though he has publicly indicated he sides with Commerce Secretary Wilbur Ross on the issue of trade restrictions. Cabinet members including Gary Cohn, Steven Mnuchin, Rex Tillerson and James Mattis are reportedly opposed to using the Section 232 law, cited by the report, to impose tariffs on national security grounds.
Recommendations of the Steel Report:
Secretary Ross has recommended to the President that he consider the following alternative remedies to address the problem of steel imports:
- A global tariff of at least 24% on all steel imports from all countries, or
- A tariff of at least 53% on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by-product on steel imports from all other countries equal to 100% of their 2017 exports to the United States, or
- A quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States.
Each of these remedies is intended to increase domestic steel production from its present 73% of capacity to approximately an 80% operating rate, the minimum rate needed for the long-term viability of the industry. Each remedy applies measures to all countries and all steel products to prevent circumvention.
The recommendations regarding aluminum advocated similarly severe actions:
- A tariff of at least 7.7% on all aluminum exports from all countries, or
- A tariff of 23.6% on all products from China, Hong Kong, Russia, Venezuela and Vietnam. All the other countries would be subject to quotas equal to 100% of their 2017 exports to the United States, or
- A quota on all imports from all countries equal to a maximum of 86.7% of their 2017 exports to the United States.
Washington DC-based news website AXIOS captured the concern of one former senior government trade official:
“[T]he opening shot in a trade war… a declaration of war against the world on aluminum and steel… These are some of our closest treaty allies… These are some serious numbers.”
Another unnamed “trade expert,” chose even more alarmist words:
“This would be beyond a trade war. You’re talking about blowing up the WTO.”
China’s Commerce Ministry has urged the US to exercise restraint in using trade protection tools and respect the rules of multilateral trade.
“If the final US decision affects China’s interests, China must take necessary measures to protect its own reasonable interests,” the ministry told Reuters, without giving details.