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Politics

US threatens restrictions on steel and aluminum imports

China says it will protect its interests while EU talks of trade war

Laborers work at a steel plant of Shandong Iron & Steel Group in Jinan, Shandong province, China in 2017.   © Reuters

WASHINGTON -- The U.S. might restrict steel and aluminum imports due to what the Commerce Department says are national security concerns.

President Donald Trump will decide by April whether to act on a report issued Friday by that department.

China would be the biggest target, but the proposed restrictions would affect all countries.

If the U.S. goes ahead and restricts imports on national security grounds, other countries would surely retaliate.

China has already threatened to do just that. China's Ministry of Commerce on Saturday called the U.S. investigation into steel and aluminum imports baseless. It issued a statement saying China will protect its domestic industries if any U.S. move adversely affects Chinese interests.

The statement was also critical of the national security argument, saying other countries could make the same case and follow suit. The impact on global trade would be profound, the statement says.

The European Steel Association, or Eurofer, meanwhile, has warned that blanket trade restrictions would "almost certainly be contested by other WTO countries" and prompt retaliation.

Secretary of Commerce Wilbur Ross on Friday defended steel and aluminum import restrictions, saying national security, though a broad concept, would be appropriate grounds on which to restrict imports.

Wilbur L. Ross, U.S. Secretary of Commerce.   © Reuters

Ross is recommending that Trump consider three remedies to stem steel imports:

--A tariff of at least 24% on all steel imports from all countries.

--A tariff of at least 53% on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, South Korea, Russia, South Africa, Thailand, Turkey and Vietnam), with quotas set on steel products from all other countries equal to 100% of their 2017 exports to the U.S.

--A quota on all steel products from all countries equal to 63% of each country's 2017 exports to the U.S.

Ross based his recommendations on Section 232 of the Trade Expansion Act of 1962. The act gives the president the power to clamp down on trade for security reasons. The Commerce Department says dumping by China and other countries undermines the U.S.'s ability to supply itself with steel and aluminum.

Atrophied steel and aluminum industries, the Commerce Department says, could keep the defense industry from supplying the armed forces with ships, fighter jets and other war machinery.

The Commerce Department also says steel and aluminum are needed for energy and basic infrastructure.

The World Trade Organization bans unilateral import restrictions but has a national security exemption.

Were the U.S. to try to use this exemption, it could provoke a backlash and throw the global trade order into chaos.

Idled blast furnaces at U.S. Steel Corp's Granite City Works in Granite City, Illinois, U.S. in 2017.   © Reuters

Eurofer proposed a fourth alternative -- that Trump decline to act.

"We urge the U.S. President: Do not pull the trigger on a new trade war," said Axel Eggert, Eurofer's director general.

The Trump administration is raising the issue ahead of midterm elections in November, with some pundits predicting a wave of Democrats making it into Congress. But restrictions on steel and aluminum imports could win over voters in the Midwest, which once thrived on steel.

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