Trade Exemptions Won and Lost

Retaliation threats, intense lobbying and an emphasis on alliances explain how some countries got steel exemptions.

Please consider the messy process that explains How Some Countries Won U.S. Tariffs Exemptions while others didn't.

An hour before the global tariffs took effect, the White House released proclamations signed by President Donald Trump that temporarily exempted select countries from the tariffs that he said were needed on national security grounds.

The excluded countries all made the case that their metal exports don’t impair U.S. national security, the legal basis for the tariffs, but different economies emphasized different approaches. Some threatened retaliation, a tactic that appeared to pay off for those nations, according to a business lobbyist in Washington.

Brazil and Australia claimed their exports of semifinished steel help rather than hurt the U.S. industry. Brazilian Ambassador Sergio Amaral and Brazil Steel Institute Chief Executive Marco Polo de Mello Lopes said they argued that their resource-rich country isn’t “part of the problem” but “part of the solution.”

Brazilian steel slab feeds an Alabama plant that rolls finished metal for the southeastern auto industry.

“Big ole chunks of steel” arrive in several ships a month at port in Mobile, Ala., from Brazil, said the port’s chief executive, Jimmy Lyons. “They also buy Alabama coal to use in the coke that they use in Brazil,” he said.

Similarly, Australian officials argued their steel doesn’t weigh on workers in Ohio and Pennsylvania since their steel is mostly shipped to facilities on the U.S. West Coast.

The steelmaker’s argument: The U.S. steel industry is divided by the Rocky Mountains. If it couldn’t import hot-rolled coil from Australia, then BlueScope’s California plant would have to transport it through the mountain range from its Ohio steelworks at almost three times the cost.

“America actually has a trade surplus with Australia, and we don’t complain about that,” Australian Prime Minister Malcolm Turnbull said Friday. Another boost: Golf legend and Trump acquaintance Greg Norman campaigned for an Australian exemption.

Those paragraphs explain, by themselves, the overall stupidity of steel tariffs.

Japan, an ally, was one nation that did not get an exemption.

“I’ll talk to Prime Minister Abe of Japan and others—great guy, friend of mine—and there will be a little smile on their face,” Mr. Trump said. “The smile is, ‘I can’t believe we’ve been able to take advantage of the United States for so long.’ So those days are over.”

The economic silliness of demanding to pay more for steel in the name of "unfair" trade is astounding. For further discussion, please see Trade Swords Sharpened, Belly Flop Reporting: Worst Response.

Mike "Mish" Shedlock

Comments
No. 1-14
whirlaway
whirlaway

That is not a surprise. These are people who have benefited from the status quo and from the ravages that trickle-down and so-called free trade have inflicted on this country. They can bitch and moan and whine all they want. No one cares, except for their fellow occupants in their ivory tower.

Sechel
Sechel

As if Trump is fully responsible for the rise. The market was rising long before Trump became President. While Trump may get some credit, credit is also due to Obama and the Federal reserve. I also use the term credit loosely as I don't think the market is validation of a policy and its highly likely we're in a bubble.

pi314
pi314

Trump has done nothing right in the view of many here. But the DJIA is still well above that of election night. Just sayin'

Sechel
Sechel

good quote. but doesn't apply here.

Sechel
Sechel

my take away was this is yet another example of the Trump administration coming out with a policy that wasn't properly thought through and had to walk back. I honestly believe this is not an administration that produces policy papers or goes through scenario analysis, more likely a policy is the result of someone getting Donald Trump's ear at the right time. if there's any doubt just look at how each announcement catches the larger staff off guard. This is not how an administration is supposed to function.