Unswayed by Republican warnings of a trade war, President Donald Trump ordered steep new tariffs on steel and aluminum imports to the U.S. March 8, vowing to fight back against an “assault on our country” by foreign competitors. The president said he would exempt Canada and Mexico as “a special case” while negotiating for changes to the North American Free Trade Agreement.
The new tariffs will take effect March 23, with America’s neighbors indefinitely spared “to see if we can make the deal,” Trump said. He suggested in an earlier meeting with his cabinet that Australia and “other countries” might be spared, a shift that could soften the international blow amid threats of retaliation by trading partners.
Those “other countries” can try to negotiate their way out of the tariffs, he indicated, by ensuring their trade actions do not harm America’s security.
Surrounded by steel and aluminum workers holding hard hats, Trump cast his action as necessary to protect industries “ravaged by aggressive foreign trade practices. It’s really an assault on our country. It’s been an assault.”
His move, an assertive step for his “America First” agenda, has rattled allies across the globe and raised questions at home about whether protectionism will impede U.S. economic growth. The president made his announcement the same day that officials from 11 other Pacific Rim countries signed a sweeping trade agreement that came together after he pulled the U.S. out of the Trans-Pacific Partnership last year.
Though he focused on workers and their companies in his announcement, Trump’s legal proclamation made a major point that weakened steel and aluminum industries represent a major threat to America’s military strength and national security.
The former real estate developer said U.S. politicians had for years lamented the decline in the steel and aluminum industries but no one before him was willing to take action.
Despite a week of furious lobbying against his plan by Republican lawmakers and some of his own advisers, Trump said he would go ahead with penalty tariffs of 25 percent on imported steel and 10 percent on aluminum. But he also said the penalties could “go up or down depending on the country and I’ll have a right to drop out countries or add countries. I just want fairness.”
Century Aluminum Chief Executive Michael Bless said the tariffs would allow his company, which produces high-purity aluminum used in military aircraft, to recall about 300 workers and restart idled production lines at its smelter in eastern Kentucky by early 2019. And Trump took note of U.S. Steel’s announcement that it planned to ramp up activity at its plant in Granite City, Illinois, and recall about 500 employees because of the new tariffs.
But there was political criticism aplenty, especially from Trump’s own Republican Party.
House Speaker Paul Ryan, appearing with Home Depot employees in Atlanta, warned of “unintended consequences.”
Democratic Sen. Dick Durbin of Illinois said Trump’s action was “like dropping a bomb on a flea” and could carry “huge unintended consequences for American manufacturers who depend on imported materials.”
Secretary of Agriculture Sonny Perdue said March 9 that while he’s as anxious as farmers are about Trump’s new tariffs, the move doesn’t look as bad as he originally thought.
Perdue said in Fargo, North Dakota, during a trip to meet with representatives of the state’s agricultural sector that Trump’s decision looks better in the final version than it did when first announced. He joked with farmers in Iowa earlier in the week that one option for farmers who fear a trade war may be to pray.
“I was very concerned last week with the surprise announcement on the steel and aluminum tariffs, as most people in the White House were,” Perdue said during a press conference at North Dakota State University. “But we hope to turn it into a positive. This president has the unique ability to turn some things that we think are initially negative into positives.”
Perdue says the final version looked much better because Canada and Mexico were excluded, which he believes could spark discussions on improving the North American Free Trade Agreement. He said he will be on edge until NAFTA is recertified and reauthorized and the U.S. addresses trade issues with its key importers.
“This is a president who is willing to change his mind over issues,” Perdue said. “He came out of the campaign literally believing that everybody in the United States hated NAFTA. And we had to walk in and show him that many of his supporters and voters benefited from NAFTA.”
Producer groups and farm state members of Congress were hearing nothing of it.
Mark Martinson, a durum wheat farmer in northeastern North Dakota, said the U.S cannot risk losing “China, Indonesia, all those markets.” Agriculture producers receive 20 cents out of every dollar from exports. Perdue heard from about 20 farm representatives, most of whom didn’t pass the microphone until saying something about trade.
Senate Agriculture Committee Chairman Pat Roberts, R-KS, also a senior member of the Senate Finance Committee, reacted in a statement, saying: “This proposal is not a tariff on steel and aluminum imports; it is a tax on consumers. As we have seen in past cases of increased tariffs, higher manufacturing costs will inevitably be passed down the supply chain, forcing consumers to bear these costs.
“While I agree action should be taken to address overcapacity of steel and aluminum, using Section 232 as a tool to impose global tariffs on imports of steel and aluminum would have detrimental consequences to the U.S. economy. The proposed tariffs would nullify the positive gains created by the recent tax reform package passed by Congress.”
Roberts expressed concern the previous week over the president’s initial comments on the tariffs and the damaging effects they could have on agriculture saying, “Like we have seen in the past, American agriculture often pays the price. We need a trade policy that is stable and beneficial to all industries.”
U.S. Grains Council President and CEO Tom Sleight said in a statement, “We have tremendous concern about the global ramifications of any new tariffs on ag exports. Agriculture markets are global, and our members—both farmers and exporters—will feel the impacts immediately when new tariffs from our trading partners impact demand. Our products can compete on price and quality anywhere in the world, but the domino effects of new tariffs could make that much, much harder.”
While tariffs and any resultant retaliation could implicate most of the major markets for U.S. grains, many markets will continue normal operations and the council will continue pressing the value of U.S. corn, sorghum, barley, DDGS and ethanol in the more than 50 countries that host its programs. Particularly in the Middle East, South America and Southeast Asia, demand continues to grow, and the council continues to serve global buyers interested in U.S. products.
“This is the time for farmers to pay attention and know that your voice is important in this debate and the growth of our global markets,” Sleight said. “The trade issues our industry is facing are complicated but they impact the bottom line directly. New demand for grains is overseas and trade policy sets the rules of the road for efforts to capture that demand.”
Nations around the globe that were not excluded from the tariffs reacted with dismay.
The European Union warned before the announcement that it was ready to retaliate with counter-measures against iconic U.S. products such as Harley Davidson motorcycles, Levi’s jeans and bourbon.
The British government said tariffs “are not the right way to address the global problem of overcapacity” and said it would work with EU partners “to consider the scope for exemptions outlined today.” Japanese Foreign Minister Taro Kono called the decision “extremely regrettable,” predicting it could have a major impact on the economy and the relationship between the U.S. and Japan, as well as the global economy.
Canadian Foreign Minister Chrystia Freeland, meanwhile, called the announcement a “step forward” and said Canadian officials had exerted tremendous efforts to get the exemption. “That Canada could be seen as a threat to U.S. security is inconceivable,” she said.
The exemptions for Canada and Mexico could be ended if talks to renegotiate NAFTA stall, the White House said. The talks are expected to resume early next month.
The run-up to the announcement included intense debate within the White House, pitting hard-liners against free trade advocates such as outgoing economic adviser Gary Cohn. Recent weeks have seen other departures and negative news stories that have left Trump increasingly isolated, according to senior officials speaking on the condition of anonymity to discuss internal discussions.