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New tariffs on imported steel and aluminum were signed amid claims that the tariffs will hurt the manufacturing industry and U.S. competitiveness. The tariffs, which have sparked tensions with U.S. allies, will temporarily exclude Mexico and Canada. White House trade adviser Peter Navarro said the administration will initially exclude Mexico and Canada as long as the two countries sign a new version of NAFTA, the North American Free Trade Agreement. Officials from Canada and Mexico have said they will not be bullied into accepting a NAFTA deal that could disadvantage their countries.
The administration has stood by the controversial tariffs amid claims from other countries vowing to respond with levies of their own. The United States issued the tariffs under a little-used provision of trade law, which allows the president to take broad action to defend American national security. The Commerce Department previously determined that imports of metals posed a threat to national security. The US is the largest steel importer in the world, buying about 35 million tons in 2017.
The order could hit South Korea, China, Japan, Germany, Turkey and Brazil the hardest. The tariff orders were tailored to give the administration the authority to raise or lower levies on a country-by-country basis and add or take countries off the list as deemed appropriate. The White House has said any nation with a security relationship with the United States was welcome to discuss “alternative ways to address the threatened impairment of the national security caused by imports from that country.” Those talks could result in the tariff being lifted, the order said.
Trade experts say the new tariffs buck years of America’s embrace of free and open trade and believe the approach would ultimately compromise the United States’ ability to temper China’s unfair trading practices. “The tariff action coupled with the mishandled renegotiations of existing trade deals have alienated the very countries we need as allies to help confront the challenges posed by China,” said Daniel M. Price, a White House adviser.
Trade experts are worried about the consequences of the new tariffs. If the World Trade Organization rules against the United States, the administration will have to decide whether to reverse its decision or go up against the organization. If the United States ignores or withdraws from the group, it could precipitate a breakdown in global trading rules and a new era of global protectionism.
In 2002, President George W. Bush imposed steel tariffs of up to 30 percent. But facing an adverse ruling by the World Trade Organization and retaliation by trading partners, the tariffs were lifted 15 months before the end of the planned three-year duration. Studies found that more jobs were lost than saved and Congressional leaders vowed not to repeat the experiment.
Many fear that if customers refuse the price hikes as a result of the tariffs, major job losses in the US will follow. Many large steel customers ranging from automakers General Motors Co., Ford Motor Co., Campbell Soup Co. and brewer Molson Coors Brewing Co. are expected to lose, as tariffs will allow domestic steel producers to raise prices.
The U.S. steel industry employed about 147,000 people in 2015, according to the Commerce Department’s Bureau of Economic analysis. Manufacturers that need steel employ about 6.5 million people each year and the construction industry employs about 6.3 million people.

 

 

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