This morning in metals news, the crossfire of tariffs and counter-tariffs between the U.S. and trading partners around the world has put the World Trade Organization in a difficult spot, President Donald Trump backed a boycott of Harley-Davidson on Sunday and LME copper drops amid the recent uptick in tensions between the U.S. and Turkey.
A World of Problems
The U.S., using Section 232 of the Trade Expansion Act of 1962, argued for its imposition of steel and aluminum tariffs on the grounds of national security. On the other hand, trading partners around the world have balked at the invocation of national security, and have responded with counter-tariffs against the U.S., which the U.S. has then contested at the WTO.
As such, the global body is in a difficult place, one in which any decision it makes will make someone unhappy.
A report in The New York Times outlines the difficulties the WTO faces.
Roberto Azevêdo, the WTO’s director general, is quoted as saying: “Whatever the outcome — regardless of how objective, balanced and unbiased it is — somebody is going to be very unhappy.”
Backing a Boycott
President Trump expressed support for a boycott of Harley-Davidson, which earlier this year announced intention to move production overseas, citing the Trump administration’s metal tariffs as the reason for the decision.
The president tweeted support for a boycott of the American company, writing: “Many @harleydavidson owners plan to boycott the company if manufacturing moves overseas. Great! Most other companies are coming in our direction, including Harley competitors. A really bad move! U.S. will soon have a level playing field, or better”
London Copper Slides
The flare-up of tensions between the U.S. and Turkey has had another consequence, beyond the impact on the Turkish lira: the strengthened dollar has seen copper prices slide.
Turkey’s detainment of American pastor Andrew Brunson led to the U.S. imposing sanctions on two Turkish cabinet ministers. In addition, last week Trump announced the U.S. would double the Section 232 metals tariffs rates on Turkey, bringing them to 50% and 20% for steel and aluminum, respectively.
As a result, the Turkish lira plummeted, while the dollar has strengthened. The dollar historically correlates inversely with copper and, as such, London copper was down 0.8% on Monday, Reuters reported.