Trump keeps U.S. allies on edge ahead of steel tariffs deadline
President Donald Trump speaks during a news conference with German Chancellor Angela Merkel in the East Room of the White House in Washington. (AP Photo/Evan Vucci, File)
President Trump on Monday neared a midnight deadline for one of the most consequential economic decisions of his presidency, whether to exempt key allies from steel and aluminum tariffs, but both cabinet members and foreign leaders remained unsure how the commander in chief will proceed.
“The president has not made any decision yet,” Treasury Secretary Steven Mnuchin said in an interview that aired Monday on Fox Business Network. Over the weekend, Commerce Secretary Wilbur Ross said that the White House would grant some countries relief, but he wouldn’t say which ones.
The deadline is a key test for Trump’s trade strategy and diplomacy, pitting his highly personal bargaining style against the determination of major U.S. trade partners and allies to hold fast and retaliate if necessaryunder World Trade Organization rules.
Trump has shown a willingness to both befriend and berate almost every ally and adversary, a dynamic that has played out in the past two months as he has tried to lure many of them into making concessions in exchange for delaying tariffs.
“We are in uncharted territory in terms of trade policy,” Chad Bown, a senior fellow at the Peterson Institute of International Economics, said. “What President Trump has done is make everything uncertain in trade policy. You don’t know on almost day-to-day basis what trade policy is going to be and businesses find it very difficult to operate in that kind of environment.”
Earlier this year, the Commerce Department issued a report alleging that the U.S. reliance on imported steel and aluminum posed a national security threat. In March, Trump used that finding to announce steep tariffs against China and Japan, temporarily offering exemptions for many other countries.
Ross said in an interview with The Post that Trump was acting within his authority. He said that under section 232 of a key U.S. trade law Trump “has very broad powers. He can raise the tariffs. He can lower them. He can let countries in and let them out.”
In recent weeks, Trump has met with leaders from three U.S. allies caught in the middle of the tariff debate.French President Emmanuel Macron and German Chancellor Angela Merkel appealed last week to Trump to alter his stance, yet the administration has continued to press for concessions and there is no guarantee that they will be spared.
European leaders have threatened a series of countermeasures if Trump goes ahead with his proposed tariffs. The European actions would target items such as motorcycles and bourbon, which are produced in Republican electoral strongholds.
In March, the administration set aside tariffs it had proposed on South Korean steel and aluminum manufacturers. In return, South Korea amended its U.S.-Korea Free Trade Agreement, accepting quotas that will cut its steel exports to the United States by 30 percent below the average of the past three years.
The Trump administration has pushed European nations to adopt the same approach, but European leaders do not want to do so. “We are asking for them either to be in the tariff mode or to accept a quota,” Ross said.
Quotas, however, are more appealing in some ways than tariffs, Bown said, because the governments of exporting countries get revenue by selling export permits to their own firms without paying anything to the U.S. government. The U.S. government would gain revenue from taxes on higher priced steel and aluminum. Consumers would pay higher prices.
The role of China looms large in all these talks. South Korea is the third largest steel exporter to the United States and the top importer of Chinese steel, which some trade experts say made it a conduit for Chinese exports to the United States.
The Chinese government in recent decades fostered massive domestic steel and aluminum industries, which have shipped their goods around the world in a way that pushed down prices. China accounts for barely 6 percent of U.S. steel imports, but Trump says that the worldwide flood of cheap steel is one factor that has led to the closure of numerous U.S. smelters, and the loss of American jobs.
A number of other countries have agreed with U.S. officials for decades that China needs to do more to address a global oversupply of steel and aluminum, but so far they have taken measured steps at international gatherings to try to prod China toward change. Trump upended this approach by declaring he would act unilaterally, and threatening to slap tariffs on numerous U.S. allies, not just China.
“The Chinese have created the overcapacity problem,” William Reinsch, senior adviser at the Center for Strategic and International Studies, said. “It’s one of the few cases in the trade business where you can assign blame and be accurate. It’s not that big a leap to say that if it is their fault it is not unreasonable to design a policy that pushes the problem back on them.”
Canada and Mexico, which would be hit by Trump’s initial proposal for broad tariffs on steel and aluminum, will be given extensions, Ross told Bloomberg News over the weekend. Canada is the single biggest source of U.S. steel imports.
Staff writer Heather Long contributed to this article.
