STEEL AND ALUMINUM: NEW TARIFFS COMING

"We'll be imposing tariffs on steel imports, and tariffs on aluminum. ... Twenty five percent for steel. It will be ten percent for aluminum. And it will be for a long period of time."

Donald Trump
March 1, 2018

Yesterday, in the Cabinet Room of the White House and in the company of Cabinet officials and CEOs from America's steel and aluminum companies, President Trump announced that the Administration plans to impose protective tariffs on imports of steel and aluminum. A more formal announcement, complete with product details and the necessary legal language, has been promised for next week. The principal rationale for such action is that imports of those two commodities threaten U.S. national security. Last month, Secretary of Commerce Wilbur Ross submitted reports to the President on the question of national security and imports of steel and aluminum, finding in both cases that imports are a threat.

More often than not the quotes selected for these pages are chosen on the assumption that some readers might not have seen them and in the hope that many of you will find them interesting. That is not the case here. Dollars to doughnuts, there isn't a reader of the TTALK Quotes who doesn't know what the President said yesterday about new tariffs on steel and aluminum. The aftermath was dramatic. The Dow fell nearly 400 points (though it has since gained most of that back), and the challenges to the President's announcement have been swift, loud, and compelling. We are not going to side here with either the President or his critics. This issue will be with us for some time. And indeed our principal reason for highlighting what the President said yesterday is because we know we shall be referring back to it again and again over the next few months. 

For now, we would simply suggest those who want to get a stronger flavor of this debate might consult a) the full transcript of yesterday's White House meeting, b) today's Wall Street Journal editorial on the issue, and c) the 232 reports from the Commerce Department that were the basis both for yesterday's announcement and for the more formal one we expect to see next week. You will find links to each of these below. 

 
Any final judgment about these new, protective tariffs will have to wait, at least, for the publication of next week's more formal, more definitive announcement. Still, for what they are worth, here is one observation and one guess. The observation is that the global tariffs announced by the President yesterday - however objectionable they may be - are nevertheless less draconian, in some respects, than some of the remedies proposed in the Commerce Department's 232 reports on steel and aluminum. 

  
As for the guess, it is very unlikely that the Administration will exempt Canada, Korea, or any other country. The CEOs who were at the White House yesterday implicitly - and very clearly - made their case for global tariffs. As Nucor's CEO John Ferriola put it, "The amount of circumvention that takes place is incredible."

To repeat, this issue has a long way to go. So, until next week... .