The US tariff rate on most imported steel and aluminium will double as President Donald Trump ratchets up a global trade war on the same day he expects trading partners to deliver their “best offer” in bids to avoid punishing import tax rates on other goods from taking effect in early July.
Trump late on Tuesday signed an executive proclamation that puts into effect from Wednesday his surprise announcement last week that he was taking the tariffs on steel and aluminium imports that had been in place since March to 50 per cent from 25 per cent.
“We started at 25 and then after studying the data more, realised that it was a big help, but more help is needed. And so that is why the 50 is starting tomorrow,” White House economic adviser Kevin Hassett said in explaining the move at a steel industry conference in Washington on Tuesday.
The increase comes into effect at 12:01am (14:01 AEST) on Wednesday.
The increase applies to all trading partners except Britain, the only country so far that has struck a preliminary trade agreement with the US during a 90-day pause on a wider array of Trump tariffs.
The rate for steel and aluminium imports from the UK – which does not rank among the top exporters of either metal to the US – will remain at 25 per cent until at least July 9.
About a quarter of all steel used in the US is imported, and Census Bureau data shows the increased levies will hit the closest US trading partners – Canada and Mexico – especially hard. They rank number one and three, respectively, in steel shipment volumes to the US
Canada is even more exposed to the aluminium levies as the top exporter to the US by far at roughly twice the rest of the top 10 exporters’ volumes combined. The US gets about half of its aluminium from foreign sources.
The unexpected increase in the levies jolted the market for both metals this week, especially for aluminium, which has seen price premiums more than double so far this year. With little current capacity to increase domestic production, import volumes are likely to be unaffected unless the price increases undercut demand.
Wednesday is also when the White House would like trading partners to submit their proposals for deals that might help them avoid Trump’s hefty “Liberation Day” tariffs from taking effect in five weeks.
Administration officials have been in active talks with a number of countries since Trump announced a pause on those tariffs on April 9, but to date only the UK deal has come to fruition.
Even that agreement, which provided the basis for the carve out from the metals tariffs, is more of a preliminary framework for more talks.
With just weeks remaining, the Trump team is eager to bring more deals over the line.
Reuters reported on Monday that the US Trade Representative was asking countries to list their best proposals in a number of key areas, including tariff and quota offers for purchase of US industrial and agricultural products and plans to remedy any non-tariff barriers.
In turn, the letter promises answers “within days” with an indication of a “landing zone,” including what tariff rates countries can be expected to be saddled with after a 90-day pause on the tariffs expires on July 8.
At issue for most trading partners is whether they retain the current baseline rate of 10 per cent on most exports to the US after that date, or something sharply higher in many cases.
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