Donald Trump has officially increased tariffs on all steel and aluminum imports to 25%.
The US President, 78, says the taxes will help create factory jobs across the US but his seesawing tariff threats have jolted the stock market and raised fears of an economic slowdown. The trade wars have even caused the wealth of some of the richest people on the planet – including Elon Musk – to tumble.
And the UK steel industry says the world leader’s tariffs “couldn’t come at a worse time” as it is thought the UK government is unlikely to immediately retaliate to the huge import tax.
Stubborn Mr Trump removed all exemptions from his 2018 tariffs on the metals, in addition to increasing the tariffs on aluminum from 10%. His moves, based off a February directive, are part of a broader effort to disrupt and transform global commerce. The President has separate tariffs on Canada, Mexico and China, with plans to also tax imports from the European Union, Brazil and South Korea by charging “reciprocal” rates starting on April 2.
Mr Trump told CEOs in the Business Roundtable on Tuesday the tariffs were causing companies to invest in US factories. The 8% drop in the S&P 500 stock index over the past month on fears of deteriorating growth appears unlikely to dissuade him, as Mr Trump argued higher tariff rates would be more effective at bringing back factories.
(
PA)
Mr Trump told the group: “The higher it goes, the more likely it is they’re going to build. The biggest win is if they move into our country and produce jobs. That’s a bigger win than the tariffs themselves, but the tariffs are going to be throwing off a lot of money to this country.”
The President on Tuesday threatened to put tariffs of 50% on steel and aluminum from Canada, but he chose to stay with the 25% rate after the province of Ontario suspended plans to put a surcharge on electricity sold to Michigan, Minnesota and New York.
Nevertheless, the move has been branded “hugely disappointing” by Gareth Stace, the director general of trade association UK Steel. He added: “President Trump must surely recognise that the UK is an ally, not a foe. Our steel sector is not a threat to the US but a partner to key customers, sharing the same values and objectives in addressing global overcapacity and tackling unfair trade.
“These tariffs couldn’t come at a worse time for the UK steel industry, as we battle with high energy costs and subdued demand at home, against an oversupplied and increasingly protectionist global landscape. What’s more, the EU is also pushing ahead with trade restrictive action that will amplify the impact of US tariffs.”
The White House has noted Volvo, Volkswagen and Honda are all exploring an increase to their US footprint. However, the prospect of higher prices, fewer sales and lower profits might cause some companies to refrain from investing in new facilities.
John Murphy, senior vice president at the US Chamber of Commerce, said: “If you’re an executive in the boardroom, are you really going to tell your board it’s the time to expand that assembly line?”
Back here, the Prime Minister’s official spokesman said the government was “engaging closely with the US and we remain prepared to defend the UK’s national interest where it’s right to do so”.