Trump Administration Delays Most Tariffs On Steel, Aluminum

Apr 30, 2018

The Trump administration has decided to hold off on imposing most of its tariffs on imported steel and aluminum until at least June 1.

Tariffs were scheduled to take effect at 12:01 a.m. Tuesday on imports from Canada, the largest U.S. supplier of steel and aluminum, as well as Mexico, Argentina, Australia, Brazil and the EU.

A source familiar with the decision says the administration has reached an agreement in principle with Australia, Argentina and Brazil, which may avoid the need for tariffs against those countries altogether.

Talks continue with Canada, Mexico and the EU.

Trump initially ordered the tariffs — 25 percent on imported steel and 10 percent on imported aluminum — in March, ostensibly to protect domestic industries, which the president called critical to national security.

But before the levies took effect, the administration granted temporary waivers to most major U.S. allies.

In recent weeks, Trump has used the tariffs — or the threat of tariffs — as a bargaining chip in broader trade negotiations.

Mexico and Canada are in talks with the U.S. on a revised North American Free Trade Agreement.

South Korean officials won a permanent exemption from steel tariffs in March as part of an updated free trade agreement with the U.S. But in exchange, South Korea had to reduce its steel exports to the U.S. by about 30 percent, Similar quotas could be imposed on other countries as part of a final deal.

Japan never got a break from the tariffs, so Japanese exporters have been subject to the levies since late March. That was a source of some friction when Trump hosted Japanese Prime Minister Shinzo Abe at Mar-a-Lago two weeks ago.

The EU had threatened to retaliate if the steel and aluminum tariffs took effect, by imposing levies of its own on politically sensitive American exports. Potential targets include Harley Davidson motorcycles, from the home state of House Speaker Paul Ryan, and Kentucky bourbon, which could get the attention of Senate Majority Leader Mitch McConnell, R-Ky.

The steel and aluminum tariffs are part of a broader effort to crack down on what Trump calls unfair trading practices. The administration has also imposed tariffs on imported solar panels and washing machines. And it's threatening hefty penalties against a wide range of exports from China.

A U.S. delegation is on its way to Beijing for trade talks later this week.

"You see what's happening with respect to trade and the United States," Trump said Monday. "We are being respected again."

Economists have warned that tariffs could backfire, by raising prices for U.S. businesses and consumers and sparking a backlash against American exports.

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The White House is postponing most of its steel and aluminum tariffs for at least another month. Tariffs were due to kick on - to kick in on a number of countries at midnight tonight. They're part of a broader effort to crack down on what President Trump calls unfair trade practices. But now the temporary waivers that some countries were issued will continue for another month. For more, we're joined by NPR White House correspondent Scott Horsley. Hey there, Scott.

SCOTT HORSLEY, BYLINE: Good evening, Audie.

CORNISH: So what have you learned from the White House?

HORSLEY: They have decided to hold off for now, and that means we will not be seeing new tariffs kick in, most importantly on Canada. That's the biggest source of foreign steel and aluminum here in the U.S. But we're also not going to see tariffs kicking in on Mexico, Australia, Argentina, Brazil or the EU.

The White House says they've reached an agreement in principle with Australia, Argentina and Brazil and hopes to finalize that within a month so those countries would not have to be subject to steel aluminum tariffs at all. In the meantime, the White House is also continuing negotiations with Canada, Mexico and the EU. So for now, those countries are getting a continued reprieve as well.

CORNISH: In the meantime, there are some countries that are actually still subject to the tariffs, right? I mean, somebody's got to fall under this list.

HORSLEY: That's right. China is still subject to these tariffs. China is not a big supplier of steel and aluminum to the United States, but it is thought to be really responsible for the global glut in those products that's driven down prices. Russia is still subject to the tariffs, and Japan is still subject.

Now, Japan is a relatively significant supplier of steel to the U.S., and of course it's an American ally. But Japan was never given one of those temporary waivers like those other countries, so customers of Japanese steel and aluminum have been seeing a tariff - 25 percent on steel, 10 percent on aluminum - since late March. That was a source of some friction when Japanese Prime Minister Shinzo Abe was down in Florida meeting with President Trump two weeks ago.

Also, South Korea has been given a permanent exemption from the steel tariffs as part of a renegotiated free trade agreement. In exchange, though, South Korea had to agree to cut its steel exports to the U.S. by about 30 percent. And the White House says it's looking to impose similar quotas on some of these other countries.

CORNISH: I know member countries of the EU were very sort of upset about these tariffs. What does this extension mean?

HORSLEY: It basically preserves the status quo. So that means there is not going to be any additional disruption for steel and aluminum customers in this country come midnight. And it also means there's not going to be any immediate retaliation from other countries that might have been hit by these tariffs.

As you mention, the EU in particular has promised to push back hard if it is eventually subjected to tariffs on steel and aluminum exports, and it's suggested it could target politically sensitive products. Those include, say, Harley-Davidson motorcycles made in the home state of House Speaker Paul Ryan and Kentucky bourbon, which could catch the attention of Senate Majority Leader Mitch McConnell of Kentucky. All of those threats of retaliation remain on hold for now.

CORNISH: To take a step back, how does this all fit into the broader trade policy of the Trump administration?

HORSLEY: Well, President Trump campaigned hard as sort of a hawkish person on trade deficits. He feels like the United States has been taken advantage of for a long time. And so we're beginning to see those trade policies actually take effect.

Earlier this year, the administration imposed tariffs on imported washing machines and solar panels, and they are weighing really big tariffs on a whole wide range of Chinese products. That's partly in response to things like the glut of steel and aluminum produced in China, but it's also in response to what the U.S. sees as unfair handling of intellectual property by China forcing, for example, American companies to transfer their technological know-how as a cost of doing business in that country. In fact, there's a delegation of U.S. officials on their way to Beijing later this week for trade talks with China.

Of course the U.S. is also trying to renegotiate the North American Free Trade Agreement with Canada and Mexico. So there's a lot going on in the trade picture. And, you know, economists say all of these tough-on-trade moves by the White House could backfire. If these tariffs ever do go into effect, what it would do is raise prices for U.S. companies and consumers. And of course there's the threat of sparking a broader trade war.

CORNISH: That's NPR's White House correspondent Scott Horsley. Scott, thank you.

HORSLEY: Good to be with you, Audie. Transcript provided by NPR, Copyright NPR.