Monday 28th May, 2018

Trump tariffs ‘black day’ for the world: BHP’s Mackenzie

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

BHP boss Andrew Mackenzie has labelled US President Donald Trump’s proposed tariffs on steel and aluminium a “black day” for the world, as the White House’s top economic advisor quits over the controversial trade measures.

Mackenzie told a Sydney business summit on Tuesday the proposed 25% and 10% tariffs, on steel and aluminium respectively, would damage free trade around the globe.

“Outside of the US the sense that I have at the moment is that people are re-embracing free trade after a bit of a wobble – partly driven by the result of several elections,” Mackenzie told the AFR Business Summit on March 6.

“I don’t see that changing any time soon but I am worried about this sort of sentimental shift, that people all around the world might suddenly say free trade is not good for the world, and that would be particularly bad for a trading company like BHP and a trading nation like Australia.”

After weeks of speculation following a report from the US Department of Trade, Trump announced on March 2 that tariffs would be imposed this week on imports of steel and aluminium.

“What’s been allowed to go on for decades is disgraceful. It’s disgraceful,” Trump told executives in his cabinet room. “You will have protection for the first time in a long while, and you’re going to regrow your industries.”

Reserve Bank of Australia governor Philip Lowe, speaking on the second day of the Business Summit in Sydney, called Trump’s plan “highly regrettable and bad policy,” and urged governments not to retaliate with further trade measures.

“The best thing to do is to sit still and not respond,” Lowe said on Wednesday, “and continue to advocate for a rules-based international system.”

His comments are aligned with those made on the same day by BlueScope chief executive Mark Vassella, who said “no one wins in a trade war”.

“From our perspective the best outcome is a free and fair, rules-based trade system,” he told the Summit.

BlueScope, which has 3000 employees in the US, is pushing for an exemption to the tariffs, and has support from government officials.

“The prime minister and the ambassador and the government have worked really hard to get an exemption for BlueScope, we think we’ve got a unique position, wo we’ll just have to see,” Vassella said. “We’ve put a really solid case … [but] whether an exemption is given is really out of our control.”

Early on Wednesday, Prime Minister Malcolm Turnbull told the Sydney gathering the tariffs could harm the US economy, rather than help it.

That matched the opinion among many of Trump’s economic advisors, before the Commander in Chief handed down his decision last Friday.

Gary Cohn, the president’s chief economic advisor, resigned Tuesday evening (US time). Trump thanked Cohn in a statement to the New York Times, before tweeting there were “many people wanting the job” to replace Cohn. “Will choose wisely!” Trump said.