Just hours before they were to go into effect, President Donald Trump postponed the steel and aluminum import tariffs for a few trade partners. China, which struck back with billions of dollars’ worth of agricultural tariffs—both threatened and realized—was not on that list.
On April 30, Trump issued two proclamations authorizing “Section 232 Tariff Modifications.” Among these modifications was an extension of the negotiation period on the tariffs for Canada, Mexico, and the European Union (EU) “for a final 30 days.” That would shift the new implementation date to June 1.
For all other countries, including China, the tariffs went into effect on Tuesday.
As originally issued on March 8, a 10 percent tariff is placed on imports of aluminum into the U.S. and a 25 percent tariff on steel imports. Between March 8 and last week, the U.S. reached agreements with Argentina, Australia, Brazil, and South Korea. Canada, Mexico, and the EU are still in discussion, according to the White House.
The European Commission—the executive of the EU—took note of the extension but did not respond warmly to it.
“The U.S. decision prolongs market uncertainty, which is already affecting business decisions,” read the official EU reaction. The EU argued that it should be exempted from the tariffs, “as they cannot be justified on the grounds of national security.”
“The EU has also consistently indicated its willingness to discuss current market access issues of interest to both sides, but has also made clear that, as a longstanding partner and friend of the U.S., we will not negotiate under threat.”
Canadian public broadcasting outlets reported that Canadian Prime Minister Justin Trudeau said he was confident that both administrations understood the harm the tariffs could cause to both sides.
“We continue to work with the administration but we are optimistic that they understand that this would be a bad thing for both of our economies,” the Canadian Broadcasting Corporation quoted Trudeau as telling a crowd in Vancouver on April 30.
China tariff tit-for-tat
Following the announcement of the steel and aluminum tariffs, China announced a list of proposed targets for retaliatory tariffs on March 23. Most of the items on the list were agricultural, including pork. The total list was estimated as $3 billion in value. These tariffs were implemented against the U.S. on April 2.
On April 3, the White House threatened $50 billion worth of proposed retaliatory tariffs, mostly focused on technological goods. On April 4, China responded with a proposed $50 billion worth of proposed retaliatory tariffs, of which $16.5 billion was estimated to be agricultural goods. These included U.S. beef, corn, and soybeans.
To continue the pattern, on April 5, the White House threatened an additional $100 billion in retaliatory tariffs, bringing the total to $150 billion. China responded in kind later that day.
It also filed a complaint with the World Trade Organization (WTO) regarding the metal tariffs, as well as the proposed $50 billion in tariffs issued by the U.S. on April 3. The Chinese complaint claimed that the tariffs are “in excess of the United States’s [sic] bound rates” and thereby violated its WTO obligations.
Though no timeline was offered from the Chinese Minister of Commerce when these threatened tariffs would take effect, it was implied that they would take effect if or when the U.S. tariffs took effect. Though the steel and aluminum tariffs have gone into effect already, the larger proposed retaliatory tariffs against China are still open for public comment. The comment period ends May 11.
On April 18, China additionally announced a 179 percent tariff on U.S. sorghum. This tariff, according to the Chinese Minister of Commerce, was to combat U.S. dumping of sorghum into China, a claim U.S. Secretary of Agriculture Sonny Perdue flatly rejected.
“The international grain market is about the freest market there is, and it is ludicrous to even mention ‘dumping,’ because China can buy product from anywhere they choose,” he said, adding that the move was “clearly a political decision.”
According to Jim Sutter, CEO of the U.S. Soybean Export Council, the April 4 Chinese threat of a 25 percent tariff increase on U.S. soybeans, plus the effects of the tariff leveled on U.S. sorghum has had a chilling effect on trade already. U.S. exports of soybeans to China last year were valued at $14 billion in 2017.
“The tariff situation has created a lot of uncertainty, both in the minds of U.S. sellers, but particularly in the minds of Chinese importers,” Sutter told DTN. “They don’t want to make a purchase, and you are sailing towards them and then have something happen and they arrive in China subject to a 25 percent import tariff.” — WLJ
“The U.S. decision prolongs market uncertainty, which is already affecting business decisions.”
