President Trump has announced new tariffs on steel and aluminum derivative products at 25% and 10% respectively. While the initial tariffs on the raw materials impose in March 2018, these new tariffs will cover approximately $500 million in goods. Their implication is that the initial raw materials tariffs caused prices to increase on manufactured goods, which will now include tariffs to offset the first set. Simple, right? The Hill kindly included this quote from Chad Bowen, a trade expert at the Peterson Institute for International Economics in Washington to explain.
“This latest action was significant because, explicitly for the first time, Trump was imposing new tariffs to help an industry suffering because of his previous tariffs.”The Hill, Nev Ellis, 02/06/2020 “Trump stirs trade concerns with new tariffs on metals”
These tariffs will deeply impact the trade agreement in place with China as the Phase One deal only impacted half of the list 4 tariffs. Beginning at 12:01 AM ET on February 8th we will see the imposition of Section 232 duties. These duties will apply to eligible products and HTS numbers from all countries except Argentina, Australia, Brazil, Canada, Mexico, and South Korea. It’s expected that these tariffs will help improve the trade imbalance in the manufacturing sector as almost $72 billion in Chinese imports will be impacted. This might prove to be untentable as the shutdown looms for the Chinese New Year slowdown.
While initial responses to these tariffs weren’t positive, US steel and aluminum sectors saw fast increases after the announcement, providing some support to the rational behind the new tariffs. As always we’ll be in waiting mode until we see if this is secretly genius or just a Band-Aid on a bullet wound.
The full text of the President’s proclamation can be found Here. We’ll update this page with further information as it becomes available.