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 (14)
No. 1-14
Curious-Cat
Curious-Cat

To partially understand Trump, pay attention to what he does, not to what he says.

Mike Mish Shedlock
Mike Mish Shedlock

Editor

What he did was increase tariffs

AWC
AWC

And signed a massive spending bill.

AWC
AWC

And appointed a war hawk as National Security Advisor.

AWC
AWC

And provided extensive military aid to Saudi Arabia.