Monday 18th Jun, 2018

BlueScope, Rio sweating over Trump steel crackdown

Donald Trump. Photo: Creative Commons / Gage Skidmore
Donald Trump. Photo: Creative Commons / Gage Skidmore

Australian steel and aluminium producers are keeping a close eye on the Trump Administration’s looming decision over foreign steel and aluminium tariffs, a program China has already threatened to retaliate to.

The US president is considering recommendations from the Department of Commerce for a global tariff of at least 24% on imported steel, and of 7.7% on aluminium.

US commerce secretary Wilbur Ross said in the report “the quantities and circumstances of steel and aluminium imports threaten to impair the national security”.

However, Trump’s own Republican party is opposed to the tariffs, responding to pressure from the nation’s beverage companies and carmakers, who have indicated the predictable jump in metal prices that would come from such action, would in turn threaten jobs.

On Australian shores, Rio Tinto and BlueScope are among the companies sweating over Trump’s decision, and whether they would be in any way exempt from the new tariffs.

Ross’ report outlined a number of alternatives to the global tariffs, including a larger tariff from certain countries not including Australia, and a quota option for all countries to send up to 63% of their steel 2017 exports to the US.

Aluminium options included in the Ross report are a larger tariff for specific countries not including Australia, or an aluminium quota of 86.7% of 2017 exports for all nations.

China is very unhappy with the report, given it is targeted or included with all major tariff and quota options. The country has this week threatened to retaliate with its own measures, if Trump indeed targets its steel and aluminium sectors.

“For the moment I think China will just put out harsher rhetoric,” one consultant told AFR this week.

“Agricultural sector retaliation is more likely since [China’s] food price inflation is low. The next possible step will be going on further with a soya bean and corn investigation.”