The United States Commerce Department last week recommended that President Trump place tariffs on steel and aluminum imports, which would mostly affect Russian and Chinese companies.
The recommendation to restrict imports in this way was made as a result of a Commerce Department review to determine whether or not the imports were reducing American national security.
Commerce determined that the imports were hurting American steel and aluminum producers which did limit American national security as the companies may not be able to produce the amount of metals needing in the event of a national emergency.
The Commerce Department recommended that the President reduce imports through tariffs or quotas to reduce imported steel to about 60% of the total imported in 2017 and to reduce imported aluminum to about 85% of the 2017 total. If the President makes a move to reduce the importation of these metals, it should work to improve the market for struggling American metal manufacturers.
But while U.S. steel and aluminum producers surged after the Commerce Department released its recommendations for restricting imports on Friday, a muted reaction among the biggest Asian metals stocks suggests the international impact will be spread thinly – unless U.S. action prompts retaliation from its biggest suppliers, Bloomberg reports.
For aluminum, Trump’s options also include a higher tariff, of 23.6 percent, on five major suppliers including China and Russia. The other possibility is an across-the-board levy of 7.7 percent.
There’s a risk that more Chinese aluminum will flow into Asian markets, weighing on prices, if the U.S. blocks imports from the top producer, a spokesman for Japan’s UACJ said by phone. Broad restrictions on imports would result in lower aluminum prices in China and on the London Metal Exchange while lifting premiums in the U.S., Goldman Sachs Group Inc. said last month.
Trump has until mid-April to decide on any potential action and could still seek negotiations with producers. The president last year ordered Commerce to probe whether imports of steel and aluminum imperil U.S. national security, invoking the seldom-used Section 232 of the 1962 Trade Act, which allows the president to impose tariffs without congressional approval.
China, the main target of the proposals, said Saturday the U.S. already has excessive protections on domestic iron and steel products and that it reserves the right to retaliate. The nation’s financial markets are closed for most of this week for the Lunar holiday, although trading in Hong Kong, where some metals firms have listings, will resume Tuesday.