The U.S. government’s steel and aluminum tariffs went into effect — and they have already created an international furor. So mission number one is accomplished. The tariffs were intended to upset the applecart of an obsolete world trading system that is politically dangerous and economically disastrous. But there is more to do. ADVERTISEMENT First of all, it must be understood that these tariffs are aimed at redressing U.S. national security and they are a response to a serious decline in U.S. production and capacity in these two industries. Worldwide overproduction and overcapacity in both metals have undermined the U.S. industries. There is an estimated 400 million tons of excess steel capacity in the world (about 25 of total capacity). That has hurt the U.S. industry badly in terms of price, profit, and employment. The situation in aluminum is even worse. In 1993, the U.S. had 23 operational aluminum smelters. Today it has five. Some 90 of primary aluminum consumed in the U.S. is imported. Both metals are the very heart of national security. Steel is of course used in every aspect of the military, including land vehicles, seagoing ships, missiles, guns, and more. Equally important: Steel is an essential component of our civilian infrastructure for use in ports, bridges, and the auto industry, to name just a few. The same goes for aluminum, a metal prized for its light weight and electrical conductivity. Aluminum is used in aerospace, in the automotive industry, and as a key component in our national electrical grid. No nation can claim to be a superpower if it is not self-sufficient in these two vital metals. The tariffs have already had a positive effect on the U.S. economy. In Ashland, Kentucky, Braidy Industries broke ground on a new aluminum rolling mill. The mill, a $1.3 billion project, will create 550 new jobs. Those workers will earn average annual pay of $65,000, in a depressed Appalachian county where the median pay is around $44,000 a year. Elsewhere in Kentucky, Century Aluminum is preparing to hire 300 more workers as aluminum demand rises. On the steel side, Nucor is planning to open a new $240 million steel mill in central Florida, creating 250 jobs, while U.S. Steel is restarting production and rehiring 500 laid-off employees in Granite City, Illinois. European misunderstanding and confusion The Europeans are up in arms. European Union Trade Commissioner Cecilia Malmstrom has called the U.S. tariffs a “dangerous game” and told BBC News, “We cannot just take these tariffs and stay silent.” The EU is reported to have prepared a 10-page list of potential tariffs they could impose against U.S. goods. There are three points I would make to my good friends in Europe. First, the steel and aluminum tariffs are not directed at the European nations, nor any other nations. They are designed to ensure that the U.S. has the capacity to produce the steel and aluminum it needs. Loss of capacity in the last 20 years has been a very real problem for U.S. industry. To rebuild capacity, we need a U.S. market in which companies can earn a decent profit. Tariffs are the simplest way to achieve that end. Secondly, in spite of the Malmstrom chaos and other rash statements emanating from European capitals, the Europeans actually do quite a good job of safeguarding their own steel industries. The three major European steel producers, Germany, France, and Italy, all operate their steel industries to ensure that net imports are very close to zero. In other words they run their industries at very close to self-sufficiency. The U.S. is simply seeking to do the same. Finally, the European leaders are living in the past. As a French actress said, “Nostalgia isn’t what it used to be.” And neither is the world of trade. The Europeans would like to go back to the harmony of the 1950s, when free trade did indeed lift many boats, including the boats of the U.S. and western European economies. But today, China’s huge economic, political, and military potential is changing the fundamental equation. Overcapacity in both industries has been caused by China’s relentless effort to expand production and dominate these two industries, among other critical industries too. We need a new solution to deal with this problem. We simply cannot allow one nation to drive other nations out of essential industries. That’s why upsetting the applecart is a great starting point. The European Union is an organization dedicated to meetings, talking shops, and bureaucracy. But those talking shops, including the World Trade Organization, the G7, the G20, and the EU, cannot force change when one large nation (China) feels no pressure to change. The U.S. has to take the lead. U.S. unilateral action is not only working to improve our economy. It will force change on the international community in a way that 100 years of talking would not do. President Trump Donald TrumpTrump lashes out after grand jury seated for New York criminal probe Schumer tees up vote on Jan. 6 commission bill Senators struggle to save Jan. 6 commission MORE’s tariffs are winning support in Congress on both sides of the aisle. The industrial benefits will win further support in the heartland. While this president may sometimes appear isolated, there is large and growing support for his positions on trade. Surprisingly enough, even the director-general of the World Trade Organization, Roberto Azevedo, is beginning to see which way the wind is blowing. On Thursday in Paris, he told the press: “you could say that the shake-up in the global trade debate has been positive…People are talking about these issues again. They are testing old certainties, revisiting assumptions, and questioning how rules and institutions can be improved.” The next decade will be very interesting times in the world of trade. Jeff Ferry is research director for the Coalition for a Prosperous America (CPA), which is an organization that advocates on behalf of U.S. manufacturing, agriculture and labor.<doc-sep>TOPSHOT - US President Donald Trump (L) and China's President Xi Jinping leave a business leaders event at the Great Hall of the People in Beijing on November 9, 2017. Donald Trump urged Chinese leader Xi Jinping to work "hard" and act fast to help resolve the North Korean nuclear crisis, during their meeting in Beijing on November 9, warning that "time is quickly running out". / AFP PHOTO / Nicolas ASFOURI (Photo credit should read NICOLAS ASFOURI/AFP/Getty Images) Canadian Prime Minister Justin Trudeau (L) and U.S. President Donald Trump pose for photographs at the White House October 11, 2017 in Washington, DC. The United States, Canada and Mexico are currently engaged in renegotiating the 25-year-old North American Free Trade Agreement. (Chip Somodevilla/Getty Images) QUEBEC CITY, QC - JUNE 08: Prime Minister of Canada Justin Trudeau (R) speaks with U.S. President Donald Trump during the G7 official welcome at Le Manoir Richelieu on day one of the G7 meeting on June 8, 2018 in Quebec City, Canada. Canada will host the leaders of the UK, Italy, the US, France, Germany and Japan for the two day summit, in the town of La Malbaie. (Photo by Leon Neal/Getty Images) President Donald Trump leaves the White House on May 25, 2018 in Washington, DC., for a trip to Annapolis to address the U.S. Naval Academy graduation ceremonies. (Photo by Oliver Contreras/SIPA USA)(Sipa via AP Images) (CNN) — Republicans on Capitol Hill were fuming after the White House abruptly announced it would begin imposing steel and aluminum tariffs Friday on US allies Canada, Mexico and the European Union. The move Thursday came after Republicans had tried to convince the administration for months to target China with tariffs rather than US trading partners, and it could trigger Republicans on Capitol Hill to consider taking action against their own President on trade. “I disagree with this decision,” House Speaker Paul Ryan, a Wisconsin Republican who had quietly tried to convince Trump to hold back on the action, said in a statement. “There are better ways to help American workers and consumers. I intend to keep working with the president on those better options.” RELATED: Trump hits allies with metal tariffs; Mexico, EU and Canada vow to retaliate The clear – and public – break between the President and top congressional Republicans had been simmering for months, with weeks of behind-the-scenes efforts to walk back, or just water down, what Trump and his team pledged to put in place. But Thursday’s move underscored the depth of the divide between the two sides of Pennsylvania Avenue, even as a legislative counter to the action was far from a sure thing, aides said. For Republican lawmakers, the administration’s decision came as a surprise, according to several senior GOP aides. Republicans didn’t get wind that it might be coming until Wednesday evening, and the White House briefing for congressional staff didn’t take place until after the announcement. One Republican senator, who asked not to be identified, complained Thursday about President Donald Trump’s decision to impose the tariffs, 25% on steel imports and 10% on aluminum imports. “I don’t like trade wars. There are no winners in trade wars. And this scares me,” the senator said. For his part, Trump has largely maintained his own posture on tariffs – one he highlighted with a single two-word tweet on Thursday: “FAIR TRADE!” – on the grounds that he was pursuing “reciprocal trade,” even amid warring factions over the efficacy of the strategy inside the White House. The exemptions for allies that had been initially proposed were considered a potential piece of the ongoing negotiations with Canada and Mexico over a revised North American Free Trade Agreement, negotiations that have continued in fits and starts for months. But with a resolution far from clear, and despite the Capitol Hill pushback, the tariffs were set to go into effect at midnight. House Ways and Means Chairman Kevin Brady released a statement that said the tariffs “are hitting the wrong target.” “When it comes to unfairly traded steel and aluminum, Mexico, Canada, and Europe are not the problem—China is. This action puts American workers and families at risk, whose jobs depend on fairly traded products from these important trading partners. And it hurts our efforts to create good-paying US jobs by selling more ‘Made in America’ products to customers in these countries,” the Texas Republican’s statement said. The news Thursday reinvigorated discussions about whether Congress would intervene, a point that had been put to rest months ago when the Trump administration announced it would impose new steel and aluminum tariffs across the board only to turn around and issue a wide list of exemptions to allies – which Republicans applauded – while it negotiated. Still, congressional options are limited. Over the last several decades, Congress has outsourced key trading decisions to the executive branch, and taking back that power would require a serious, united front from GOP leaders in a midterm election year. “I call on the administration to continue the exemptions and negotiations with these important national security partners to find a solution and address the damage caused to American exporters. And the administration will need to come to Capitol Hill to provide answers about the indiscriminate harm these tariffs are causing our local businesses,” Brady said. Lamar Alexander, the chairman of the Senate’s Health, Education, Labor and Pensions Committee, put it simply: “This is a big mistake.” “These tariffs will raise prices and destroy manufacturing jobs, especially auto jobs, which are one-third of all Tennessee manufacturing jobs. I have urged President Trump to focus on reciprocity – do for our country what our country does for you – instead of imposing tariffs, which are basically higher taxes on American consumers,” the Tennessee Republican said. Bad news that @POTUS has decided to impose taxes on American consumers buying steel and aluminum from our closest allies--Canada, the EU, and Mexico (with whom we run a trade surplus on steel). In addition to higher prices, these tariffs invite retaliation. — Senator Pat Toomey (@SenToomey) May 31, 2018<doc-sep>(CNN) — President Donald Trump is launching a global trade war, and Trump country could take much of the heat. In the wake of new tariffs, car plants from Michigan to South Carolina and Alabama could pay more for the steel they use to make engines and auto parts. Whiskey from Kentucky and motorcycles made in Wisconsin, meanwhile, will shortly be subject to retaliatory tariffs from Europe. The Trump administration on Thursday announced that it would impose steep tariffs on steel and aluminum from Canada, Mexico and the European Union. All three have pledged to swiftly fight back with tariffs of their own. The President wants to impose the 25% tariff on steel and 10% tariff on aluminum in order to protect jobs in those industries. But the taxes will raise prices for downstream companies that use those materials in their products. Retaliatory tariffs from US trading partners, meanwhile, are devised to inflict maximum pain on Trump-supporting areas to encourage the President to back down. Congressional Republicans have already started raising the specter of job losses in their states. “These tariffs will raise prices and destroy manufacturing jobs, especially auto jobs, which are one-third of all Tennessee manufacturing jobs,” Sen. Lamar Alexander, a Tennessee Republican, said Thursday. He called the new tariffs a “big mistake.” Tennessee, which voted for Trump in 2016, has roughly 350,500 manufacturing workers, according to data from the Bureau of Labor Statistics. The state has multiple auto plants, including a Volkswagen factory in Chattanooga, a GM factory in Spring Hill and a Nissan factory in Smyrna. “There is a lot of concern here about the impact it would have in Tennessee,” said Bradley Jackson, president of the Tennessee Chamber of Commerce and Industry. Retaliatory tariffs from Canada, Mexico and the EU could also impact red states. That’s by design. Experts say the list of US goods that will be targeted by Europe is intended to hurt states that voted for him. Tariffs on whiskey will affect jobs in Kentucky, the home state of Senate Majority Leader Mitch McConnell. Tariffs on motorcycles will affect Harley Davidson, which has its headquarters in House Speaker Paul Ryan’s native Wisconsin. “They’re pretty savvy about this,” said Ross Denton, an international trade specialist and partner at law firm Baker McKenzie. “It’s quite a calculated process.” The EU hopes that if lawmakers face job losses in their districts, they will try to pressure Trump to change his policies, Denton said. US agricultural products from red states are also in the line of fire for retaliatory tariffs. Mexico said it will slap trade penalties on American pork, for example. Pork production is concentrated in North Carolina, Iowa, Minnesota, Illinois, Indiana, Nebraska and Missouri. All of those states except Minnesota and Illinois voted for Trump in 2016. “The Europeans and Mexico have targeted industries that have politically prominent locations,” said Brad Setser, senior fellow for international economics at the Council on Foreign Relations. “They’ve followed the standard playbook on how to retaliate effectively.” Our allies know that farmers are a sympathetic demographic in the United States, and a blow to them carries political costs, said Gary Hufbauer, a trade expert at the Peterson Institute for International Economics. In the meantime, the threat of a trade war with China looms large. Earlier this week, the White House said it is moving forward with tariffs on $50 billion worth of Chinese goods as punishment for intellectual property theft. China has previously said it would respond to this action with tariffs on $50 billion worth of US exports, including soybeans. Soybeans are big business in Midwestern states like Iowa, where Trump has strong support. The Chamber of Commerce, which opposes the tariffs, has warned that the Trump administration’s trade policies will be felt in largely Republican areas. “The current approach will deliver the greatest economic pain to precisely those areas of the country that the administration and the Congressional majority are counting on for continued political support,” Chamber of Commerce President Tom Donohue said in an internal memo obtained by CNNMoney.<doc-sep>Foreign Affairs Minister Chrystia Freeland said the government is looking at offering support to steel and aluminum workers impacted by U.S. tariffs. On Thursday, U.S. President Donald Trump announced tariffs of 25 per cent on steel and 10 per cent on aluminum that would apply to Canada, Mexico and the EU. To minimize the harm done to those sectors, Freeland said she wanted to assure workers the government will come to their aid — though she didn't say how or when. Prime Minister Justin Trudeau said Friday that he's already reached out to Canadian steel and aluminum producers to talk about upcoming short-term challenges. When asked if the help would resemble the $867 million in loans offered during the U.S.-Canada standoff over softwood lumber, Freeland called the two situations "very different, but the principle is the same." Since the tariffs are different, she said the impacts and subsequent government response will be unique to steel and aluminum workers. Foreign Affairs Minister says government bailout possible for steel, aluminum producers Politics 1:37 Chrystia Freeland told CBC Radio's The House the government will support Canadian metal workers from the fallout of U.S. tariffs. 1:37 In August, the government threatened legal action against the U.S. if negotiations on softwood lumber remained stalled. The Conference Board of Canada estimated the duties on softwood lumber duties would cost Canadian producers $1.7 billion a year and cost 2,200 jobs. But now the focus has shifted to metal. "The end game is for the United States to remove its illegal and completely unjustified tariffs," Freeland told CBC Radio's The House. Canada and U.S. slap each other with tariffs The National 6:00 Washington says it will hit Canada with tariffs on steel and aluminum. In response, Ottawa is retaliating with a long list of surtaxes on U.S. imports. 6:00 Canada is countering the U.S. move by imposing dollar-for-dollar tariffs of its own, worth $16.6 billion, on everything from steel and aluminum products to maple syrup, beer kegs, hair lacquers, whisky and toilet paper. The government has given two weeks for Canadians to weigh in on the list before tariffs take effect on July 1. But Freeland made it clear the goal is to get the tariffs repealed. "I believe common sense will prevail," she said. "People don't do things that hurt themselves for that long." The House 10:04 Interview - Chrystia Freeland After the U.S. announced it was slapping import tariffs of 25 per cent on steel and 10 per cent on aluminum, Canada counter-punched by imposing dollar-for-dollar tariffs of its own on a long list of U.S. products ranging from steel to maple syrup. Not only is Canada fully engaged in a escalating trade battle with its southern neighbour, it's all happening after a near breakthrough in the NAFTA talks. Foreign Affairs Minister Chrystia Freeland joins us to discuss what comes next. 10:04 Alberta prepared to write cheque for Trans Mountain, but not yet Alberta Premier Rachel Notley has been pushing the federal government to act in order to complete the controversial expansion of the Trans Mountain pipeline. (Jason Franson/The Canadian Press) Alberta is keeping their game plan for the Trans Mountain pipeline closed to the public — for now. Premier Rachel Notley told The House her province has agreed to indemnify the federal government up to $2 billion for increases in construction costs on the expansion. Details on the specific situations that would prompt Alberta to get involved remain foggy, but Notley said the province wouldn't necessarily be on the hook for the full amount. "It's not a guarantee that we would be putting in the full $2 billion by any means," she said. Morneau says government is buying Trans Mountain pipeline Politics News 2:21 Finance Minister Bill Morneau explains the reasons behind the government's decision to buy the Trans Mountain pipeline for $4.5 billion. 2:21 She said Canadians will know more details in the coming weeks and months, but it's "a long ways down the road" before Alberta gets financially involved. "Our amount of money does not become payable until the project is complete," she said. The Liberal government announced this week that it will buy Kinder Morgan's Trans Mountain pipeline and related infrastructure for $4.5 billion, and could spend billions more to build the controversial expansion. Finance Minister Bill Morneau said the project is in the national interest, and proceeding with it will preserve jobs, reassure investors and get resources to world markets. He said he couldn't state exactly what additional costs will be incurred by the Canadian public to build the expansion, but suggested a toll paid by oil companies could offset some costs and that there would be a financial return on the investment. Kinder Morgan had estimated the cost of building the expansion would be $7.4 billion, but Morneau insisted that the project will not have a fiscal impact, or "hit." The House 7:04 Interview - Rachel Notley Alberta Premier Rachel Notley shares her thoughts on Ottawa's move to buy the Trans Mountain pipeline. 7:04 Government culture a roadblock for auditor general recommendations Auditor General Michael Ferguson holds a press conference following the tabling of his reports in the House of Commons in Ottawa on Tuesday, May 29, 2018. (Canadian Press/Sean Kilpatrick) Canada's auditor general says his work has made one thing clear: the government has a culture problem that makes meaningful change difficult. Michael Ferguson released his spring audits on Tuesday, which included scathing criticisms of the government's performance on the Phoenix pay system, Indigenous services and the military justice system. It's not the first time many of these problems have been highlighted in Ferguson's reports — and that, he said, is the problem. "I think it is time for me to say... OK, we need to have better responses to our recommendations," he told CBC Radio's The House. He pointed to the Phoenix failure and the decades-long struggle to improve education for First Nations children as two issues that perfectly illustrate what he calls challenges with the inner workings of government. "[It's] not just because of a policy breakdown, there's something in the culture of government that's causing that."<doc-sep>
US tariffs: Steel and aluminium levies slapped on key allies Published 31 May 2018 image copyright Reuters image caption The EU has threatened "all necessary measures" in response The US is to impose tariffs on steel and aluminium imports from key allies in Europe and North America. The US said a 25% tax on steel and 10% tax on aluminium from the EU, Mexico and Canada will start at midnight. The move immediately triggered vows of retaliation from Mexico, Canada and the EU, which called the tariffs "protectionism, pure and simple". The UK said it was "deeply disappointed" by the US decision, which followed weeks of negotiations. The tariffs will hit products such as plated steel, slabs, coil, rolls of aluminium, and tubes, raw materials which are used extensively across US manufacturing, construction, and the oil industry. EU trade commissioner Cecilia Malmstrom said it was a "bad day for world trade", while European Commission president Jean-Claude Juncker said the move was "totally unacceptable". The EU has "no choice" but to bring a case before the World Trade Organization and impose duties on US imports, he added. Canadian Prime Minister Justin Trudeau said the tariffs were an "affront" to the longstanding relationship between Canada and the US, especially to the "thousands of Canadian soldiers who fought and died alongside their American comrades-in-arms" in Afghanistan. He said Canada plans to levy tariffs on American products worth about $13bn starting 1 July. It is also planning a challenge at the World Trade Organization. He said: "We have to believe that at some point common sense will prevail but we see no sign of that in this [US] action today." What American products will be affected by retaliation? media caption Trudeau: Canada not US national security threat Canada said it would put 25% tariffs on certain types of American steel, as well as a 10% tax on other items, including yoghurt, whiskey and roasted coffee. Mexico's Economy Ministry said it is planning new duties for steel, pork legs and shoulders, apples, grapes, blueberries and cheese. Europe had previously outlined a list of items, including US bourbon, cranberries and jeans, as targets for retaliation. How did this start? US President Donald Trump announced plans for tariffs on foreign steel and aluminium in March, justifying them on national security grounds. He has argued that global oversupply of steel and aluminium, driven by China, threatens American steel and aluminium producers, which are vital to the US. Since the announcement, South Korea, Argentina, Australia and Brazil have agreed to put limits on the volume of metals they can ship to the US in lieu of tariffs. The US granted temporary exemptions to the EU, Canada and Mexico amid negotiations over limits. That deadline was due to expire on 1 June, having already been extended by a month. What did the US announce? US Commerce Secretary Wilbur Ross announced the sanctions from Paris, where he had been negotiating with EU leaders who were trying to avert the tariffs. Mr Ross said talks had not made enough progress to warrant a further reprieve either for Europe or for Canada and Mexico, which are in negotiations with the US over North America's free trade agreement. Mr Trump has the authority to lift the tariffs or alter them at any time, he added. "We continue to be quite willing and indeed eager to have discussions with all those parties," Mr Ross said. Analysis: Theo Leggett, BBC business correspondent The Trump administration is determined to wring concessions from its trading partners around the world - and it's prepared to do so in belligerent style. The President believes cheap imports harm US industry and cost US workers their jobs. On the campaign trail, he promised them a fairer deal - and it seems he's happy to risk a trade war to get what he wants. In fact, he has previously suggested that trade wars are "good, and easy to win". So will it go that far? Certainly, the EU and Mexico seem prepared to retaliate - and Canada has hinted it in the past might take action as well. So it's not looking good. But if you look at Washington's dealings with China - its key target on trade - things seem less clear cut. On several occasions the rhetoric between the two sides has been ramped up, threats have been made, then positions have softened. So far, an all-out trade war has been avoided. And China has made some concessions.