CAUSE:
As U.S. allies, Japan and South Korea feel particularly wounded
over steel tariffs >>>>>>>>>>
And on a policy front, Abe has been an
enthusiastic supporter of almost everything Trump has said, especially when it
comes to putting “maximum pressure” on North Korea.
But now, Japan, which is not just led by a
friendly politician but is a key security ally of the United States, looks
likely to be slapped with tariffs on its steel exports to the United States.
“The U.S. is suddenly treating Japan as a
target,” said Tsuyoshi Kawase, a professor of international trade policy at
Sophia University in Tokyo.
Things had been looking up for Japan on the
trade front. Trump had been talking about returning to the 12-nation
Trans-Pacific Partnership, which Japan had helped conclude even after
the United States withdrew, and high-level trade talks had been taking place.
“The Japanese side is bewildered and confused,
wondering if the U.S. will really impose these tariffs on Japanese steel,”
Kawase said.
Trump delayed making a final decision on
imposing tariffs on steel and aluminum imports, although he has intimated that Canada
and Mexico will get an exception. Other countries will be considered on
national security grounds, the White House has said.
Japan and South Korea, another close security
ally that is also set to be hit with tariffs, are now furiously lobbying the Trump
administration to be exempted.
South Korea is the third-largest exporter of
steel to the United States, after Canada and Brazil. It sold 3.5 million
tons of steel products to the United States last year. Japan exported
1.9 million tons of steel to the United States last year and 33,000 tons
of aluminum.
Trump has proposed tariffs of 25 percent
on steel imports and 10 percent on aluminum.
South Korea’s trade minister, Kim Hyun-chong,
is now on his second trip to Washington in two weeks, meeting with Commerce
Secretary Wilbur Ross and Trade Representative Robert E. Lighthizer, as well as
key lawmakers such as Senate Finance Committee Chairman Orrin G. Hatch
(R-Utah). That is in addition to the campaign being waged in Washington by a
special South Korean trade task force.
The trade battle with South Korea — the
prospect of steel tariffs follows on the heels of similar levies on solar
panels and washing machines — comes at a sensitive time on the diplomatic
front.
Trump’s administration does not exactly have the best
relationship with Moon Jae-in’s progressive government in
Seoul. But Moon has been going all-out to facilitate dialogue between North Korea and
the United States, creating the prospect of a lull in tensions,
if not the start of a thaw.
With the alliance in a delicate spot, South
Korea’s Foreign Ministry said this week that the tariffs could have a “negative
impact on South Korea-U.S. relations.”
Ahn Deuk-geun, a professor at Seoul National
University’s Graduate School of International Studies, said: “The South Korean
government is perplexed with this trade backlash because it comes at a time of
cooperation with the U.S. on North Korea-related issues. The South Korean
government maintains that the security and trade issues are separate, but in
the big picture, this is awkward.”
This will only become more awkward if South
Korea takes a case against the United States to the World Trade Organization.
For its part, China is issuing stern warnings
that it would come back with a “justified and necessary” response if the United
States moved to start a larger trade war.
“As for our trade frictions, history teaches us
that trade war is never the right solution,” China’s foreign minister, Wang Yi,
said at a news conference Thursday. “In a globalized world it is particularly
unhealthy, as it will harm the initiator as well as the target country.”
“The bottom line is,” Wang said, “as the
world’s largest economies, China and America’s interests are deeply entwined.”
Andy Rothman, an investment strategist at the
Matthews Asia investment firm, said that if China believes it is being targeted
on trade by Washington,“Beijing will respond in a proportionate way — probably
by curbing imports of American soybeans in the hope that Midwestern farmers
will mark their displeasure at the ballot box in November’s midterm elections.”
While China is threatening and South Korea is
lobbying, Japan is trying to work behind the scenes to get added to the
exemption list.
“Japan is taking a quiet approach, trying not
to let the trade issue take a toll on the overall alliance,” said Tsuneo
Watanabe, a senior research fellow at the Sasakawa Peace Foundation.
“If Japan protests openly, it would just lead
to a tit-for-tat with Trump, and Japan knows that’s something it shouldn’t do,”
he said.
To try to avoid tariffs, Japan’s officials are
focusing particularly on the fact that its steel industry — unlike China’s —
poses no national security threat to the United States.
“Exports of high-quality steel and aluminum
from Japan, a U.S. ally, do not damage the U.S.’s national security in any
way,” Hiroshige Seko, Japan’s trade minister, told reporters in Singapore this
week. “Instead, they are contributing to the U.S. economy and creating jobs.”
Toyota Motor Corp., the world’s second-largest
carmaker, has said the tariffs would substantially raise the prices of cars and
trucks it sells in the United States. Japanese steel company executives are
concerned that the move could cause upheaval in global markets.
“We are deeply concerned these tariffs will
affect the steel trade across the entire world, especially if other countries
follow suit and also become protectionist,” said Kosei Shindo, who is president
of Nippon Steel, Japan’s biggest steelmaker, and chairman of the Japan Iron and
Steel Federation.
“Trump says the WTO has ruined the U.S.
economy, but the free-trade order that WTO sustains is extremely important for
the whole world,” Shindo said at a news conference.
Said Watanabe, the Japanese researcher: “When
trade friction grows between allies, the alliance is weakened. But it’s unclear
if Trump understands that.”
China files trade complaint against US over steel tariffs
>>>>>>>>>>>>>
China
has filed a World Trade Organization complaint challenging U.S. President
Donald Trump's tariff hike on imported
steel and aluminum, according to a trade body.
China
has requested 60 days of consultations with the United States on the steel and
aluminum dispute, said the WTO.
Chinese employees watch hot red steel at a steel plant in
Zouping in China's eastern Shandong province on March 5, 2018.
China has filed a World Trade Organization complaint challenging
U.S. President Donald Trump's tariff hike on imported steel and aluminum, the
trade body said Tuesday.
The tariff spat is one element of a wide-ranging trade dispute
between Trump and Chinese President Xi Jinping's government. Trump also has
threatened to increase duties on $50 billion of Chinese goods in a separate
conflict over technology policy.
China has requested 60 days of consultations with the United
States on the steel and aluminum dispute, according to the WTO. If that fails,
the next step could be for Beijing to request a ruling from a panel of trade
experts.
Beijing says Trump's decision to impose additional duties of 25
percent on steel and 10 percent aluminum violate international trade rules.
Steel and aluminum are among Chinese industries in which supply
exceeds demand. China's trading partners complain its mills are exporting their
surplus at improperly low prices, threatening jobs in the United States and
Europe.
The United States buys little Chinese steel and aluminum
following earlier tariff hikes meant to offset what Washington says are
improper subsidies to producers. But economists said Beijing responded in order
to show it would defend itself.
China's government issued a $3 billion list of U.S. goods
including pork, apples and steel pipes on March 23 that it said might be
targeted for retaliation if Trump fails to negotiate a settlement to the
dispute over steel and aluminum charges
Asia's biggest exporters bristle over U.S. tariffs, fanning
trade war fears >>>>>>>>
TOKYO (Reuters) - Major Asian nations reacted sharply on Friday
to U.S. President Donald Trump’s decision to impose tariffs on steel and
aluminum imports, warning of damage to relations amid industry calls for
retaliation.
Japan said the move would have a “big impact” on the countries’
close bilateral ties, while China said it was “resolutely opposed” to the
decision and South Korea said it may file a complaint to the World Trade
Organization.
Trump on Thursday pressed ahead with the imposition of 25
percent tariffs on steel imports and 10 percent for aluminum on Thursday, though
he announced exemptions for Canada and Mexico, and said exceptions could also
be made for other allies.
China, which produces half the world’s steel, will assess any
damage caused by the U.S. move and “firmly defend its legitimate rights and
interests,” the country’s Ministry of Commerce said.
The tariffs would “seriously impact the normal order of
international trade,” the ministry said.
The European Union, Brazil and Argentina said overnight they
should not be targeted or would seek exemptions, and both Japan and South Korea
said they would ask to be made exceptions also.
South Korea, a key Washington Asian ally, is the third largest
steel exporter to the United States, after Canada and Brazil.
The U.S. is the world’s biggest importer of steel, purchasing 35
million tonnes of raw material in 2017. Of those imports, South Korea, Japan,
China and India accounted for 6.6 million tonnes.
“We should prevent a trade war situation from excessive
protectionism, in which the entire world harm each other,” Trade Minister Paik
Un-gyu told a meeting with steelmakers.
Trade tensions between China and United States have risen since
Trump took office. China accounts for only a small fraction of U.S. steel
imports, but its massive industrial expansion has helped create a global glut
of steel that has driven down prices.
China’s steel and metals associations urged the government to
retaliate against the United States, citing imports ranging from stainless
steel to coal, agricultural products and electronics.
It was the most explicit threat yet from the country in an
escalating trade spat.
The dispute has fueled concerns that soybeans, the United
States’ most valuable export to the world’s second largest economy, might be
caught up in the trade actions after Beijing launched a probe into imports of
U.S. sorghum, a grain used in animal feed and liquor.
“The cost of a trade war will be tremendous and it will make
everyone unhappy,” Junichi Makino, chief economist at SMBC Nikko Securities in
Tokyo, said in a report on Friday.
TRANSSHIPMENTS
Trump’s declaration coincided with the signing by 11 countries
of a new Trans-Pacific trade pact that the United States withdrew from last
year.
The announcement underlines concerns about rising U.S.
protectionism and the latest tariffs offset the positive impact from plans also
announced overnight for Trump to meet with North Korea’s Kim Jong Un that
raised hopes of ending a standoff over North
Korea’s nuclear weapons program, said Kwon Young-sun, an
economist at Nomura Securities.
While carrying a message to Washington to push forward a
diplomatic breakthrough over North Korea, South Korea’s national security office chief Chung Eui-yong requested U.S. officials to
support South Korea’s request for a waiver on the steel tariffs, a South Korean
presidential spokesman said.
Trump in January ordered tariffs on solar panels and washing
machines imports to the United States.
Exports of these products and steel and aluminum make up less
than 1 percent of South Korea’s total exports, Young-sun said.
“But broader U.S. curbs and countermeasures from Europe or China
could derail the exports environment going forward,” he said.
A senior South Korean official said the tariffs would impact the
renegotiation of the bilateral free trade deal with the United States that is
currently underway.
The official said ways had to be found to address steel
overcapacity in China as South Korea was the top importer of Chinese steel,
although shipments from China were 21 percent down in 2017 from the previous
year.
He said the United States has raised concerns over South Korea’s
“transshipment” of Chinese steel, although the trade ministry has argued that
only 2.4 percent of steel exported to the U.S. uses Chinese material.
The official also expect higher U.S. tariffs to put South Korean
carmakers, Hyundai Motor (005380.KS) and Kia Motors (000270.KS), at a disadvantage in the U.S. market as it would
increase their costs.
In Sydney, Prime Minister Malcolm Turnbull sounded confident of
getting favorable treatment as Trump spoke of Washington’s strong relationship
with Australia, a major exporter of iron ore but exports little steel and the
United States was not a major customer.
“I was pleased to see the president acknowledge the strong
points I have been making to him. There is no case for imposing tariffs on
Australian steel,” Turnbull told reporters in Sydney.
India’s steel ministry said in a note to the trade ministry last
month that U.S. import tariffs were expected to lead to a loss of $130 million
in exports which were expected to total 333,656 tonnes for the year ending on
March 31.
European Union Trade Commissioner Cecilia Malmstrom will host
her U.S. and Japanese counterparts in Brussels on Saturday to discuss steel
overcapacity as part of talks that begin in December at a World Trade
Organization meeting in Buenos Aires.
Shares in China’s steel and aluminum makers fell on Friday
morning. Baoshan Iron & Steel (600019.SS) was down 3.3 percent by 0616 GMT, while Hesteel (000709.SZ) and Beijing Shougang (000959.SZ) were down more than 1 percent.
In South Korea, shares in Posco 0054900.KS were down 3.5
percent, while in Tokyo Japan’s biggest steelmaker Nippon Steel & Sumitomo
Metal (5401.T) fell 0.7 percent by the close.
Chinese steel futures slumped to their weakest level since
November.
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