United States allies want dispensation or exemption from the list of countries slapped with steel and aluminum import tariffs. The tariffs will be imposed by the US starting in mid March 2018.
By
·4 minutes read
BRUSSELS, FRIDAY — United States allies want dispensation or exemption from the list of countries slapped with steel and aluminum import tariffs. The tariffs will be imposed by the US starting in mid March 2018. US President Donald Trump had signed the import tariff regulation on Thursday (8/3) afternoon Washington time, or early Friday Jakarta time.
The 25 percent import tariff for steel and 10 percent for aluminum will be effective in the next two weeks. Through the policy, the Trump administration wants at least 80 percent of US steel and aluminum product being absorbed domestically.
Also, the regulation will drive refinery and related industry to relocate their businesses to the US. “If you do not want to pay the import tariff, bring your plant to the US,” he said.
Trump said such a policy did not apply to countries that conducted fair trade practices. Until now, only Canada and Mexico are exempt, but several US allies want exemption as well.
“The European Union is a close ally of the US, and we believe the EU must be exempted from the policy. I want to clarify further in the next few days,” said EU trade commissioner Cecilia Malmstrom.
The EU is not only preparing for exemption — they have also identified several US products in the European market, such as motorcycles, fashion and liquor. The EU plans to retaliate with high tariffs on those products if their exports to the US are hampered by Trump policy.
The EU is also ready to bring the case to the World Trade Organization (WTO). “It is clearly not in line with WTO rules. So we will go to the WTO, possibly with several partners. We have to protect the industry with equal action,” she said.
Malmstrom said the import tariff was not a solution to the US steel and aluminum products that were not absorbed by domestic market. She said there was a chance to solve the issue resulting from Trump policy.
Japan’s foreign minister, Taro Kono, also wants exemption for Japan as a close ally of the US.
The US tariff policy, he said, could bring a significantly negative impact to the economic relationship of both countries. Japan’s Cabinet chief secretary, Yoshihide Suga, said Japan’s steel and aluminum exports did not affect US security. Indeed, Japan’s export contributed to US industry and jobs.
Not a solution
British Trade Minister Liam Fox also blamed Trump\'s policy. “We can settle the US steel surplus through multilateral negotiation. This import tariff is wrong. Protectionism, high import tariff will never work,” he said.
He said he would visit the US to discuss possible exemption for the United Kingdom. “We have to wait for what would be announced,” he said.
Separately, International Monetary Fund managing director Christine Lagarde worried about retaliation due to the Trump policy. “The growing tensions harm the economy. Moreover, the impact would affect the trust [of business players and investors],” she said.
Lagarde added the trade was an engine that drives the global economy to be better and had only recently recovered from crisis.
Impact on Indonesia
Bank Mandiri senior economist Andry Asmoro said the impact of a trade war could reach the financial sector, mainly the export-based export import financing and industry. Indonesia’s majority exports to the US are manufactured products, such as textiles and garments, footwear, rubber and processed rubber and processed shrimp.
“If the production is affected, the financing of the sector is also affected,” he said.
As a coal producer, Indonesia could also be affected. “If China\'s industry reduces steel and aluminum production, Indonesia’s coal export to the main export destination also gets corrected,” he said.
Andry said Indonesia ranks 16th in the list of countries that cause a US trade deficit. If the import tariff on Indonesian export products were also increased, it would affect the manufacturing industry and its derivatives.
Industry Minister Airlangga Hartarto said Indonesia needed to be cautious over China\'s products following Trump\'s policy, adding that Indonesia needed to prepare safety measures in anticipation.
Indonesia Steel and Iron Industry Association executive director
Hidayat Triseputro said China had export duty incentives mainly for alloy steel. Such a policy makes the price of China’s steel 28 percent lower than the product of other countries.
“No countries can compete against this,” he said. He proposed full control over very specific and varied steel products whose harmonized system (HS) number is prone to changes so that they meet targets and do not over supply.