In the final hours before new tariffs on steel and aluminum imports were to take effect, the White House late Thursday issued a trio of proclamations to fine tune the tariffs, exempting several allied nations with whom negotiations were ongoing.
The first proclamation called for suspending the 25% tariff on steel imports and the 10% tariff on aluminum imports for several nations -- Argentina, Australia, Brazil, Canada, the European Union, Mexico and South Korea -- until May 1. By that date, President Trump "will decide whether to continue to exempt these countries from the tariffs, based on the status of the discussions."
Two additional proclamations released Thursday elaborate further on the exemptions, for steel and aluminum, respectively. The tariffs took effect on Friday.
"I have determined that the necessary and appropriate means to address the threat to the national security posed by imports of steel articles from these countries is to continue ongoing discussions and to increase strategic partnerships, including those with respect to reducing global excess capacity in steel production by addressing its root causes," Trump wrote in the second proclamation, on steel imports. Nearly identical language was in the third proclamation that addressed aluminum imports.
In a note to clients Friday, analysts with ClearView Energy Partners LLC said its interpretation of the exemptions had changed since Thursday.
"Yesterday, we viewed the exemptions as a potential offset to the Trump administration's increasingly protectionist stance on trade because they spared countries that accounted for about 60% of U.S. goods exports [during the 2017 calendar year]," ClearView said. "In last night's proclamation, the White House appears to have preserved the option -- but by no means any obligation -- to spare major U.S. trade partners from steel tariffs.
"Instead, the president's mention of 'adjustments' that could reallocate tariffs from exempt and excluded volumes to non-exempt and non-excluded volumes and the prospect of retroactive quotas to prevent transshipment offer this week's second data point in a strict steel policy (Monday's interim final rule detailing limited, narrow and contestable product-level exclusions was the first)."
ClearView reiterated its estimate that exemptions to the steel tariff would have sheltered about 35%, or 12.07 million metric tons (mmt) of steel imported during the 2017 calendar year, or about 40% (about 2.04 mmt) of U.S. pipeline steel imports.
Senators Not Happy
On Thursday, U.S. Trade Representative Robert Lighthizer told the Senate Finance Committee that the aforementioned countries would be exempt from the tariffs, at least for now.
However, lawmakers voiced irritation at being left out of the loop over the negotiations. They also expressed concern that Trump's announcement Thursday that he would impose $60 billion in tariffs on Chinese goods would leave the United States open to retaliation. Underscoring that fear, the Dow Jones Industrials fell 723 points on Thursday.
"The idea that the president has is that, based on a certain set of criteria, some countries should get out” from the tariffs, Lighthizer said. "There are countries with whom we're negotiating. The question that becomes the obvious one [is], as a matter of business, how does this work?
"What [Trump] has decided to do is to pause the imposition of the tariffs with respect to those countries."
Several lawmakers on the committee, including ranking Sen. Ron Wyden (D-OR), complained at how the process has unfolded over the last two weeks.
"We're the committee of jurisdiction here," Wyden said. "Everybody here wants to be part of the consultation process. We haven't had much [consultation] recently."
Near the end of the two-hour hearing, Wyden struck a bipartisan tone with Committee Chairman, Sen. Orrin Hatch (R-UT).
"You and I have felt so strongly, as have our colleagues on a bipartisan basis, that real consultation means that we have got to get information to be able to do vigorous oversight," Wyden said. "That means getting it certainly well in advance of this morning -- 12 hours before the tariffs go into effect. I only make that point because I want to work with you on improving consultation."
Last Monday, the Trump administration outlined a procedure for requesting an exemption to the tariffs and began accepting such requests. The oil and gas industry and its allies have argued that an exemption is justified for specialty steel products, such as those used in pipeline construction, because there is an insufficient supply of comparable products from domestic steel manufacturers.