US’s trading partners united in their condemnation of Trump’s tariffs
Tokyo/London — Various countries reacted on Friday to US President Donald Trump’s decision to impose tariffs on steel and aluminium imports.
Major Asian nations warned of damage to relations amid industry calls for retaliation, while the UK said the US was taking the wrong approach and it would be "absurd" for Britain to be caught up in them.
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 might file a complaint to the World Trade Organisation (WTO).
UK Trade Secretary Liam Fox said there was overproduction of steel in the world, mainly coming from China, but that protectionism "never really works", adding that British steel was used to supply the US military.
"So it’s doubly absurd that we should then be caught on an investigation on national security," Fox said on BBC’s Question Time late on Thursday evening.
"We can deal multilaterally with the overproduction of steel, but this is the wrong way to go about it."
He said he would raise the issue with the US in a trip to Washington next week.
Trump on Thursday pressed ahead with the imposition of 25% tariffs on steel imports and 10% for aluminium, although 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, would assess any damage caused by the US 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 EU, Brazil and Argentina said overnight they should not be targeted or would seek exemptions, and Japan, South Korea also said they would seek exceptions.
South Korea, a key Washington Asian ally, is the third-largest steel exporter to the US, after Canada and Brazil.
"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 tension between China and US has risen since Trump took office. China accounts for only a small fraction of US 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 US, 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 fuelled concerns that soybeans, the US’s 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 US 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.
Trump’s declaration coincided with the signing by 11 countries of a new Trans-Pacific trade pact that the US withdrew from last year.
A senior South Korean official said the tariffs would affect the renegotiation of the bilateral free trade deal with the US that was currently under way.
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% down in 2017 from the previous year.
He said the US had raised concerns over South Korea’s "transshipment" of Chinese steel, although the trade ministry had argued that only 2.5% of steel exported to the US used Chinese material.
The official also expected higher US tariffs to put South Korean car makers Hyundai Motor and Kia Motors at a disadvantage in the US market as it would increase their costs.
In Sydney, Prime Minister Malcolm Turnbull sounded confident about getting favourable treatment as Trump spoke of Washington’s strong relationship with Australia, a major exporter of iron ore, although it exports little steel and the US is 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 US 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.
Shares in China’s steel and aluminium makers fell on Friday morning. Baoshan Iron & Steel was down 3.6% by 4.51am GMT, while Hesteel and Beijing Shougang were down more than 1%.
In South Korea, shares in Posco were down 3.6%, while in Tokyo Japan’s biggest steelmaker Nippon Steel & Sumitomo Metal was down 0.7%. Chinese steel futures slumped to their weakest level since November.