German Economy Minister Criticizes US Proposals to Increase Tariffs on Steel

The U.S. Department of Commerce is considering imposing customs taxes or quotas for steel and aluminum imports. You would need to resuscitate a lot of mills that have been shut down in the last three or four years. The actual report pointed its finger to China’s chronic global steel oversupply as a cause of weakening the U.S. economy and analyzed that steel imports will not decline unless this issue is resolved.

When a bipartisan group of senators last week warned Donald Trump about the impact on Canada of invoking “national security” motives to limit metal imports, the President snapped: “Canada has treated us very, very unfairly when it comes to lumber….”

The Department of Commerce also suggested either a similar quota system for aluminum, or a 7.7% tariff on aluminum entering the USA from all countries, or a 23.6% tariff on imports from five countries and territories, including China and Hong Kong.

Now Ohio’s legislators in Washington want action on possible tariffs and quotas on imports from countries known for “dumping” their steel on the US market.

The remedies are “intended to increase domestic steel production from its present 73% of capacity to approximately an 80% operating rate”, he said. The reports reveal harsh trade recommendation made by Secretary Ross. While China is identified as the main culprit in creating a global steel glut, most of its imports reach the United States indirectly through other Asian countries.

Global quotas were at the heart of another plan outlined in the report.

The DOC’s recommendations provided a boost to the stocks of leading domestic steel companies.

In addition to being important economic trading partners, the United States and South Korea are also longstanding military allies that have been closely coordinating to resolve the growing North Korean nuclear threat. AK Steel Holding Corporation’s AKS shares rallied 13.7% while Steel Dynamics, Inc.

Trump said last week he would push for a “reciprocal tax” against countries, including allies of the USA, that levy tariffs on American products. In South Korea, SeAH Steel Corp., which sells pipes to the US, dropped as much as 7.6 percent, while Japan’s Yamato Kogyo Co. gained as much as 8 percent because of its large USA operation that would be untouched by duties. While Nucor carries a Zacks Rank #2 (Buy), both AK Steel and Commercial Metals now has a Zacks Rank #3 (Hold).

“The process is ongoing”, said Canadian government spokesman Adam Austen, making the point that Canada buys more US steel than the rest of the world combined.

It cites China as the largest producer and exporter of steel and the largest source of excess steel capacity, which exceeds the total USA steel-making capacity. China is by far the largest producer and exporter of steel, and the largest source of excess steel capacity. Aluminum production peaked more recently than steel, but the decline has been just as swift. However, imports from other countries such as Germany, Taiwan, Brazil and Russian Federation spiked past year.

Schumer is urging the president to “quickly follow through with his promise to stand up for these workers and American manufacturing by adopting the full extent of these recommendations”. President Trump will make the final decision based on the report by April 11.