Trump Says Administration Will Implement Steel, Aluminum Tariffs Next Week

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The U.S. Department of Commerce. qingwa/Adobe Stock

After a hectic morning during which it seemed like a Section 232 announcement from President Trump was coming, before it then it seemed like it would be postponed, an announcement did finally come.

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CNN reported earlier today that Trump said his administration will put tariffs on steel and aluminum imports of 25% and 10%, respectively, next week. The numbers as announced today differ from those offered up in the Section 232 recommendations produced by Secretary of Commerce Wilbur Ross (which were made public in mid-February).

Unsurprisingly, the announcement was felt throughout the metals world, up and down the value stream.

“We appreciate the President’s commitment to strengthening the U.S. aluminum industry,” said Heidi Brock, president and CEO of the Aluminum Association, in a prepared statement. “We look forward to working with the President on implementation and to creating a more level playing field.”

Scott Paul, president of the Alliance for American Manufacturing, expressed support but urged Trump to follow through with a broad action.

“We’re on the brink of a potentially historic rebalance of America’s trade priorities,” Paul said in a prepared statement. “As we noted in a letter to the president this week and our cable TV ad, we are confident a robust steel trade action is good for our economy. A decision to retore sanity to global steel markets will help create domestic jobs and preserve our national security.

“But to achieve those results, the president’s enforcement action must be broad, robust and comprehensive. We urge the president to stand by our nation’s steel communities. They are counting on him to follow through on this.”

The announcement was not met positively by everyone, however.

“Today’s decision by the Administration to implement new tariffs severely harms the $37 billion U.S. recreational boating industry and the 650,000 American workers it supports,” said Thom Dammrich, president of the National Marine Manufacturers Association, in a statement. “While these tariffs are meant to protect American manufacturing, they do just the opposite. U.S. manufacturers, like those in our industry, which use American-made aluminum, depend on a competitive global market and fair pricing. What’s more, U.S. aluminum manufacturers are at capacity and unable to supply the aluminum sheet used by our members, forcing them to seek it overseas.”

Many associations and government officials alike have warned that the tariffs could set off a trade war, cautioning retaliation should the U.S. impose the tariffs. The European Steel Association (EUROFER), responded to the president’s announcement on Thursday.

 “From one day to the next, EU steel exports to the US – which were at 5 million tonnes in 2017 – will be cut drastically by an estimated 50% or more. The same will happen with all other countries exporting steel to the US. We expect that the tariff could restrict US imports by up to 20-25 million tonnes overall. This would represent a volume representing more than half the total EU imports of 2017 (40 million tonnes),” said Axel Eggert, director general of EUROFER, in a prepared statement. “In the current context of massive global excess steel capacity, markets will be forced to take preventive contingency actions to avoid domestic market disruption from trade deflection.”

The announcement from Trump roiled the markets today. The CBOE’s Volatility Index — or VIX, by its ticker symbol, surged Thursday afternoon, indicating greater volatility.

The VIX shot up Thursday following Trump’s announcement on the intention to impose steel and aluminum tariffs next week. Source: CBOE

Elsewhere, the Dow Jones dropped more than 400 points after Trump’s announcement, CNBC reported.

Steel and aluminum stocks, however, received a boost from the announcement.

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As of just after 3 p.m. Eastern Time, Nucor Corporation was up 3.04%, while AK Steel was up 7.36%. Century Aluminum was up 8.24% for the day, and U.S. Steel posted a 6.09% increase.

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