President Trump is expected to sign a formal order imposing steep tariffs on imported steel and aluminum as early as Thursday. It’s the boldest move to date for the president who campaigned on a protectionist platform sharply at odds with Republicans’ free-trade orthodoxy.
“We’re going to build our steel industry back, and we’re going to build our aluminum industry back,” Trump said when he first announced the proposed tariffs on March 1. He also said, “They’ve been horribly treated by other countries, and they have not been properly represented. More importantly, because of that, workers in our country have not been properly represented.”
Trump’s plan calls for a 25 percent tariff on imported steel and a 10 percent levy on imported aluminum. Although the president prefers to apply the tariffs on imports from any country, some exceptions could be made.
“There are potential carve-outs for Mexico and Canada, based on national security, and possibly for other countries as well,” White House press secretary Sarah Huckabee Sanders said Wednesday.
Canada is the leading supplier of imported steel and aluminum to the U.S., accounting for 16 percent of imported steel and 41 percent of imported aluminum, as CNBC has reported.
Domestic steelworkers applauded the president’s move.
“Everybody’s just happy,” said Mark Goodfellow, head of the Steelworkers Local 420A in Massena, N.Y., where Alcoa employs about 500 people. “It feels like the American worker is getting a break and finally getting a shot to compete on a level playing field.”
U.S. Steel announced plans to restart one of two idle blast furnaces in Granite City, Ill., and call back some 500 workers.
Both the steel and aluminum industries have been under heavy pressure from imports. In recommending tariffs or quotas, the Commerce Department noted that employment in the domestic steel industry has shrunk by 35 percent in the last two decades, while the aluminum industry shed nearly 60 percent of its jobs between 2013 and 2016.
“Those are bedrock, backbone industries of this country,” said White House trade adviser Peter Navarro. “And the president is going to defend them against what is basically a flood of imports that have pushed out American workers, aluminum smelters. And we can’t afford to lose them.”
Authority for the tariffs comes from a seldom-used law from the 1960s that’s designed to protect domestic industries deemed vital to national defense.
But Defense Secretary James Mattis questioned that premise, noting that military demand for steel and aluminum can be met with just 3 percent of domestic production. What’s more, unless the U.S. declares war on its neighbor to the north, metal supplies from Canada are not likely to be compromised.
Experts say the real challenge for industry is China, which produces almost as much steel in a month as the U.S. does all year. But the U.S. has already imposed anti-dumping measures against Chinese producers, and relatively little Chinese metal flows directly into the U.S. market.
“Even though China’s over-capacity is weighing down global prices, it’s not the direct cause of a loss of our aluminum and steel industries,” Navarro said. “The direct cause is simply the foreign steel that crosses our borders. And that is what we must stop.”
Critics worry that tariffs will increase costs for businesses and consumers and could spark retaliation from America’s trading partners. Republican lawmakers have been urging the White House to adopt a more surgical approach, including carve-outs for U.S. allies such as Canada.
“If these tariffs are implemented with a broad brush, it will have the potential to backfire, cost us jobs at home, force consumers to pay higher prices for goods, and ultimately hurt our economy,” warned Rep. Erik Paulsen, R-Minn., chairman of the Joint Economic Committee.
The tariffs have also caused friction within the administration. Trump’s top economic adviser and free-trade advocate Gary Cohn announced his resignation on Tuesday.
“President Trump is a unique negotiator,” Agriculture Secretary Sonny Perdue said this week, as Radio Iowa reported. “Sometimes he keeps people off balance, even his own staff.”
Many farmers are heavily dependent on export markets and could be hard-hit by a trade war. Asked for his advice, Perdue chuckled softly and said, “Pray.”