Ford, GM Shares Drop as US Commerce Recommends Metals Tariffs

Ford, GM Shares Drop as US Commerce Recommends Metals Tariffs

In a call with reporters Friday, Wilbur Ross, secretary of commerce, laid out a variety of recommendations for President Donald Trump to choose from, including a 24 percent tariff on all steel imports from all countries.

If the president accepts any of the recommendations from the Commerce Department's report on aluminum imports, it will dramatically increase the cost of aluminum in the USA and put at risk American jobs in the beer industry, as well other industries that are users of aluminum.

The country-specific aluminum tariff option would impose a 23.6 percent tariff on all products from China, Hong Kong, Russia, Venezuela and Vietnam.

While there is little doubt that steel is necessary for USA military superiority, as R Street pointed out in a January policy study by Trade Policy Manager Clark Packard, only 3 percent of steel shipped domestically in 2016 was used for national security or homeland security purposes.

"The DOC reports provide a comprehensive listing of the countries - Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam - that have relentlessly violated trade laws".

Trump must make a decision by April 11.

"What we're talking about is tariffs and or quotas", Trump told the group.

Century Aluminum Company owns primary aluminum capacity in the United States and Iceland.

Already, there are reports that the European Union - one of the biggest exporters of steel to the United States - could retaliate with a tariff on United States agricultural goods.

The aluminum recommendations include a 7.7% tariff on imports from all exporter nations. The country's imports are almost four times the amount of exports, according to the report.

The investigations were carried out under a 1962 law authorizing the administration to assess domestic production of material needed for national defense, the domestic industry's capacity to meet those requirements and the "close relation of national economic welfare to USA national security".

Molson Coors Brewing, the maker of Coors Light and Miller Light, reportedly warned past year that aluminum duties would "obviously get passed on to us and the customer". No matter what he decides to impose, tariffs will be an incremental boost to companies like U.S. Steel, which has struggled with billions in losses over the past decade.

At today's reduced military spending, military consumption of aluminum is a small percentage of total consumption and therefore is insufficient by itself to preserve the viability of the smelters. The report explains that China produces almost as much steel in one month than the US does in a year.

The department suggests a variety of ways the United States could act to restrict imports.