The UK steel industry has warned Donald Trump’s plans for steep US tariffs on steel imports would “seriously undermine” its competitiveness.
The announcement by the US President sparked an immediate threat of “countermeasures” from Europe and sent world stock markets plunging amid fears of a global trade war and higher costs for US manufacturers.
Mr Trump said it was in response to decades of “disgraceful” unfair trade policies – after the US steel industry suffered from cheap Chinese steel coming on to the market, driving down prices.
The President did not specify whether his plan would apply worldwide or just to major world players such as China and India but it was enough for UK producers to warn of a devastating impact if the country was targeted.
The announcement of proposals for a 25% tariff on steel imports and a 10% levy on aluminium came despite apparent internal White House wrangling over the strategy.
Mr Trump summoned US industry executives on Thursday and told them: “What’s been allowed to go on for decades is disgraceful.
“You will have protection for the first time in a long while and you’re going to regrow your industries.
“We’re going to build our steel industry back and our aluminium industry back.”
Mr Trump had earlier tweeted that many US industries had been “decimated by decades of unfair trade and bad policy”.
Our Steel and Aluminum industries (and many others) have been decimated by decades of unfair trade and bad policy with countries from around the world. We must not let our country, companies and workers be taken advantage of any longer. We want free, fair and SMART TRADE!
— Donald J. Trump (@realDonaldTrump) March 1, 2018
Richard Warren, head of policy at UK Steel, responded: “Whilst we still await the precise detail of these measures, and there is still a lingering hope that these tariffs may not target the UK and EU, President Trump’s comments do indicate the introduction of blanket measures to restrict the import of all steel imports regardless of their origin.
“This would be a unilateral, and extremely blunt, approach to what is a complex global problem of overcapacity in the steel sector.
“This requires a coordinated global approach. Whilst we all too well understand the frustrations of the US sector, measures such as these smack of short-termism, protectionism and would be rife with unintended consequences for global trade and for the users of steel in the US.
“At a UK level, our sector exports some £360m worth of high-value steel products into the US each year, almost 15% of our exports.
“These measures, would seriously undermine our ability to compete in this market.”
The industry body also warned of risks to competitiveness without any tariffs on UK exports because it expected that steel diverted from the US would find its way to other markets, including Britain.
A steel trade war could prove catastrophic for UK producers at a time when the sector is still recovering from its own crisis – also created by increased global production – that saw a flood of cheap steel from China force prices down.
The Unite union demanded Government action to ensure there was no impact on the UK.
European Commission president Jean-Claude Juncker also reacted strongly against the threat, saying the move appeared to be a “blatant intervention to protect US industry” and “could only aggravate matters”.
Shares in American steel makers rose in response to the tariff announcement but manufacturers such as Boeing fell on fears their costs would be hit by the decision, helping drive the wider stock market sharply lower.
The Dow Jones closed 1.7% down while Asian markets later followed suit with Japan’s Nikkei shedding 2.2%.
China’s main Shanghai Composite was just 0.5% lower. The FTSE 100 followed the risk-off mood by falling 0.3% on opening.
Imposing the tariffs is likely to escalate tensions with China and other trading partners, and critics fear they will retaliate with trade penalties of their own.
China has already threatened to curb imports of US soybeans in retaliation while the European Union has said it will consider action as well.
Senator Pat Roberts, who chairs the Senate’s agriculture committee, said: “Every time you do this, you get a retaliation.”
US car makers and other companies that use steel or aluminium could also be hit, as the tariffs would push up their costs.