Unable to reach alternative agreements, US President Donald Trump has decided to impose tariffs on steel and aluminum imports from the previously exempt Canada, Mexico and the EU, effective Friday, June 1. The move was announced Thursday by US Commerce Secretary Wilbur Ross.
US market prices for steel and aluminum gained on the developments, but just barely, according to S&P Global Platts Wednesday price assessments.
- US-made hot-rolled steel coil – the benchmark, bellwether product – edged up just 0.5% to $893.50/short ton Thursday, adding $4.75/st from Wednesday.
- The Midwest US Transaction Aluminum price also inched higher, +0.9% to 125.419 cents/lb ($1.254/lb) from Wednesday's 124.261 cents/lb, which includes the underlying London Metal Exchange plus the regional (US Midwest) price differential.
According to the US Census Bureau, the US imported 34.5 million metric tons of steel in 2017—more than 40% of that total from Canada, Mexico and the EU.
- Some 26% of it from Canada and Mexico (8.9 million mt, combined; 5.7 million mt from Canada, 3.2 million mt from Mexico).
- Another 14.5%, or nearly 5 million mt from the EU.
Aluminum imports, meanwhile, have risen to 90% of total demand for primary aluminum, up from 66% in 2012.
Reaction was swift – in the US, from around the globe and across commodities.
- The Trump administration is "hitting the wrong target" by imposing tariffs on steel and aluminum imports from Canada, Mexico and the EU, US Representative Kevin Brady, chairman of the House Ways and Means Committee, said Thursday. Like the president, Brady, from Texas, is a Republican.
- US tariffs on Canadian steel and aluminum are "totally unacceptable" and Canada is taking steps to retaliate, Prime Minister Justin Trudeau said. Canada will impose tariffs against imports of steel, aluminum and other products from the US. The Canadian tariffs, which will affect up to C$16.6 billion ($12.8 billion) in imports, will only apply to goods originating from the US and will take effect July 1. The tariffs will remain in place until the US eliminates its trade-restrictive measures against Canada, Trudeau said.
- Mexico will impose tariffs on various US products. The Mexican tariffs will be on US products including flat steel -- hot-and cold-rolled coil, including coated and various tubes -- lamps, pork legs and shoulders, sausages and food preparations, apples, grapes, blueberries, various cheeses, and more, the Secretariat of Economy said in a statement.
- The European Union said Thursday it will launch legal proceedings against the US at the World Trade Organization on Friday in response to the US imposing tariffs of 25% on steel imports and 10% on aluminum imports.
- European Steel Association Eurofer condemned the US decision, calling on the European Commission to swiftly adopt comprehensive safeguards to ensure access to traditional trade flows.
- The US Grain Council is deeply concerned about the new tariffs, President and CEO Tom Sleight said Thursday, noting, “We have every reason to believe U.S. agriculture, including the products we represent, will be among the first hit by counter measures from our trading partners."
- Mexico is the top US export customer for corn, DDGS, pork, poultry and barley; and is among the top three customers for beef and sorghum, according to US Grain Council data.
- Canada is among the top ten US export customer for corn, barley, beef, corn-gluten-meal, DDGS, ethanol, pork and poultry.
- European Union is the top US export customer for corn-gluten-meal; and is among the top-ten customers for corn, barley, beef, DDGS, and ethanol.
- Oil and gas industry interests feared higher materials costs, supply chain headaches and risks to trading relationships, following the Trump decision. The added tariffs will "cause a slowdown in oil and gas exploration and production activity for an industry that is still in recovery mode, which will result in job loss, decreased production and related tax revenue, negatively impacting many areas of our state and national economy," said Ed Longanecker, president of the Texas Independent Producers & Royalty Association.
- Don Santa, president and CEO of the Interstate Natural Gas Association of America, called the latest action "very troubling" to the US pipeline industry and "inconsistent with the administration's long-standing goal to capitalize on our nation's energy abundance to help bring low-cost energy to American consumers."
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