WASHINGTON – President Donald Trump said on Thursday the United States would impose tariffs of 25 per cent on steel imports and 10 per cent on imported aluminum next week.
At a meeting with U.S. industry officials at the White House, Trump vowed to rebuild American steel and aluminum industries, saying they had been treaded unfairly by other countries for decades.
The move is likely to increase tensions with China, whose top trade official Lui He is in Washington for trade talks.
An early morning tweet from Trump that said the steel and aluminum sectors needed protecting from unfair trade drove shares in domestic industries sharply higher.
AK Steel Holding was up 2.8 per cent, U.S. Steel Corp was up 2.3 per cent and Nucor rose 1 per cent. By contrast, industrial stocks such as Boeing fell, with traders citing tariffs, which would hit manufacturers.
The administration says duties would protect U.S. industry, but critics say they would raise costs for industry and fail to deliver on a campaign pledge to boost domestic jobs.
WATCH: White House comments on tariff announcement as Dow Jones plummets
Trump tweeted on Thursday that American steel and aluminum companies needed “free, fair and smart trade.” Trump has indicated he favors a duty of 24 per cent on steel imports.
The administration has also cited national security interests for its action, saying the United States needs domestic supply for its tanks and warships. The Department of Defense has recommended targeted steel tariffs and a delay in aluminum duties.
Although China only accounts for two percent of U.S. steel imports, its massive industry expansion has helped produce a global glut of steel that has driven down prices.
WATCH: Liberals say Trump tariffs on steel, aluminum ‘unacceptable’
China has indicated it could retaliate against U.S. steel tariffs by targeting imports of U.S. agricultural commodities, such as soybeans of which America is the largest supplier.
Trade tensions between the United States and China have risen since Trump took office in 2017 and the administration is also pushing on what it regards as forced technology transfers to China.
Shares of Asian steel producers such as South Korea’s POSCO and Nippon Steel fell overnight.
FEW MORE JOBS FROM TARIFFS
While American steelmakers have lost three-quarters of their jobs between 1962 and 2005, a major study by the American Economic Association showed that much of this had been due to improved production technology as output per worker rose fivefold.
“Thus, even if trade protection leads to increased domestic production, increases in employment may be far less than many hope,” a report from the highly-regarded independent Econofact economist network said last week.
READ MORE: Canada hopes for leniency as Trump threatens to impose global steel tariffs
Consumers of steel and aluminum have lobbied hard against the tariffs. Econofact said in its report that two million jobs were in industries that use steel “intensively,” including auto parts, household appliances, farm machinery and oil equipment.
WATCH: Justin Trudeau says notion that Canada not trusted on steel trade is ‘silly’
Jobs in the consuming industries are concentrated in California, Texas, the Northeastern and Midwestern states that comprise the rust belt and states in the Southeast.
“Across many states, the number of jobs adversely affected in these steel-using industries could far exceed any steel jobs saved,” Econofact warned.
“Past experience also shows that unilateral action like Section 232 tariffs will invite retaliation — the Bush-era steel tariffs led many countries to target politically sensitive U.S. exports like Florida oranges and North Carolina textiles.”
— Reporting by Susan Heavey, David Shepardson, Steve Holland, Lesley Wroughton and Eric Walsh Writing by David Chance Editing by Chizu Nomiyama and Alistair Bell