Trump slaps 25% taxes on foreign steel & aluminium

Associated Press

Washington: President Donald Trump is hitting foreign steel and aluminium with a 25% tax. If that sounds familiar, it's because he did pretty much the same thing during his first term. Trump's original metals tariffs gave America's struggling steel and aluminum producers some relief from intense global competition, allowing them to charge higher prices. In anticipation of the new tariffs, shares of steel and aluminum producers climbed Monday.

Nucor rose 5.6%, Cleveland-Cliffs jumped 17.9% and Alcoa ticked up 2.2 per cent. But the tariffs took a toll last time, too, damaging US relations with key allies and driving up costs for “downstream' US producers that buy steel and aluminum and use them to manufacture goods. Timothy Zimmerman is CEO of one of those downstream companies: Mitchell Metal Products in Merrill, Wisconsin. And he still has bad memories of those times. “We were significantly impacted,' he said. “The challenges we faced were unprecedented -- rapid inflationary impacts from domestic steel producers. We saw steel prices rise within a few months about 70% over what they had been ... Our (steel) suppliers simply broke contracts and gave us an option: Take this or take nothing.'

But Mitchell Metal Products was locked into contracts with its customers a wide range of businesses from furniture makers to telecommunications firms that didn't allow it to pass along all or part of the higher cost. His company's profit margins were squeezed, and it ended up losing business to European rivals that didn't have to contend with the fallout from Trump's steel tariffs. The overall economic impact on the United States was limited then – and is likely to be limited again -- because steel and aluminium imports amount to barely a ripple in the almost $30 trillion US economy.

Still, the new taxes on foreign steel and aluminium and Trump's other import tax plans including his promise to raise American tariffs to match those charged by other countries are likely “to boost US inflation and weigh on global growth this year,' Jennifer McKeown and Hamad Hussain of Capital Economics wrote Monday. The steel and aluminium tariffs would hit US allies. Canada is the No. 1 supplier of foreign steel and aluminium to the United States. Mexico is the No. 3 steel supplier, and Japan and South Korea are also major steel exporters to the US.