President Trump on Monday neared a midnight deadline for one of the most
consequential economic decisions of his presidency, whether to exempt
key allies from steel and aluminum tariffs, but both cabinet members and
foreign leaders remained unsure how the commander in chief will
proceed.
“The president has not made any decision yet,” Treasury Secretary Steven
Mnuchin said in an interview that aired Monday on Fox Business Network.
Over the weekend, Commerce Secretary Wilbur Ross said that the White
House would grant some countries relief, but he wouldn’t say which ones.
The deadline is a key test for Trump’s trade strategy and diplomacy,
pitting his highly personal bargaining style against the determination
of major U.S. trade partners and allies to hold fast and retaliate if
necessaryunder World Trade Organization rules.
Trump has shown a willingness to both befriend and berate almost
every ally and adversary, a dynamic that has played out in the past two
months as he has tried to lure many of them into making concessions in
exchange for delaying tariffs.
“We are in uncharted territory in terms of trade policy,” Chad Bown, a
senior fellow at the Peterson Institute of International Economics,
said. “What President Trump has done is make everything uncertain in
trade policy. You don’t know on almost day-to-day basis what trade
policy is going to be and businesses find it very difficult to operate
in that kind of environment.”
Earlier this year, the Commerce Department issued a report alleging
that the U.S. reliance on imported steel and aluminum posed a national
security threat. In March, Trump used that finding to announce steep tariffs against China and Japan, temporarily offering exemptions for many other countries.
Ross said in an interview with The Post that Trump was acting within his
authority. He said that under section 232 of a key U.S. trade law Trump
“has very broad powers. He can raise the tariffs. He can lower them. He
can let countries in and let them out.”
In recent weeks, Trump has met with leaders from three U.S. allies
caught in the middle of the tariff debate.French President Emmanuel
Macron and German Chancellor Angela Merkel appealed last week to Trump
to alter his stance, yet the administration has continued to press for
concessions and there is no guarantee that they will be spared.
European leaders have threatened a series of countermeasures if Trump
goes ahead with his proposed tariffs. The European actions would target items such as motorcycles and bourbon, which are produced in Republican electoral strongholds.
In March, the administration set aside tariffs it had proposed on South
Korean steel and aluminum manufacturers. In return, South Korea amended
its U.S.-Korea Free Trade Agreement, accepting quotas that will cut its
steel exports to the United States by 30 percent below the average of
the past three years.
The Trump administration has pushed European nations to adopt the same
approach, but European leaders do not want to do so. “We are asking for
them either to be in the tariff mode or to accept a quota,” Ross said.
Quotas, however, are more appealing in some ways than tariffs, Bown
said, because the governments of exporting countries get revenue by
selling export permits to their own firms without paying anything to the
U.S. government. The U.S. government would gain revenue from taxes on
higher priced steel and aluminum. Consumers would pay higher prices.
The role of China looms large in all these talks. South Korea is the
third largest steel exporter to the United States and the top importer
of Chinese steel, which some trade experts say made it a conduit for
Chinese exports to the United States.
The Chinese government in recent decades fostered massive domestic steel
and aluminum industries, which have shipped their goods around the
world in a way that pushed down prices. China accounts for barely 6
percent of U.S. steel imports, but Trump says that the worldwide flood
of cheap steel is one factor that has led to the closure of numerous
U.S. smelters, and the loss of American jobs.
A number of other countries have agreed with U.S. officials for decades
that China needs to do more to address a global oversupply of steel and
aluminum, but so far they have taken measured steps at international
gatherings to try to prod China toward change. Trump upended this
approach by declaring he would act unilaterally, and threatening to slap
tariffs on numerous U.S. allies, not just China.
“The Chinese have created the overcapacity problem,” William Reinsch,
senior adviser at the Center for Strategic and International Studies,
said. “It’s one of the few cases in the trade business where you can
assign blame and be accurate. It’s not that big a leap to say that if it
is their fault it is not unreasonable to design a policy that pushes
the problem back on them.”
Canada and Mexico, which would be hit by Trump’s initial proposal for
broad tariffs on steel and aluminum, will be given extensions, Ross told
Bloomberg News over the weekend. Canada is the single biggest source of
U.S. steel imports.
Staff writer Heather Long contributed to this article.
