Australia to Be Exempted From Section 232 Tariffs; Tensions High With EU
Australian Prime Minister Malcolm Turnbull said in a March 12 tweet that President Donald Trump gave a commitment that Australian steel and aluminum will not be subject to tariffs. The path to get an exemption for the European Union, however, looks rocky. Trump tweeted on March 10: "The European Union, wonderful countries who treat the U.S. very badly on trade, are complaining about the tariffs on Steel & Aluminum. If they drop their horrific barriers & tariffs on U.S. products going in, we will likewise drop ours. Big Deficit. If not, we Tax Cars etc. FAIR!"
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Trump has complained about EU taxes on U.S. cars, and said that the U.S. should raise its tariffs on EU-made cars to match them. EU Trade Commissioner Cecilia Malmström met with U.S. Trade Representative Robert Lighthizer that day, and told him she expects the EU to be exempted from the tariffs. "I had a frank discussion with the US side about the serious pending issue of steel and aluminum tariffs. As a close security and trade partner of the United States, the European Union must be excluded from the announced measures. No immediate clarity on the exact US procedure for exemption however, so discussions will continue next week," she tweeted.
Hiroshige Seko, minister of economy, trade and industry of Japan, also met with Lighthizer, and said Japan also wants an exemption. The U.S. is reportedly still formulating its guidelines on how countries could get waivers, and those rules could be published soon, according to The Wall Street Journal.
One possibility is that voluntary export restraints could be a mechanism to secure exemptions, Chad Bown, a senior fellow at The Peterson Institute for International Economics, said on a podcast. The most famous instance of a voluntary export restraint came in the 1980s, when American anger over its trade deficit with Japan convinced that country to restrict its auto exports.
Seko, Lighthizer and Malmström put out a joint statement after their meeting in Brussels, saying they all want to address non-market-oriented policies in the metals industries and practices that lead to severe overcapacity. They said they will work on forming stronger rules on industrial subsidies and will work jointly on disputes at the World Trade Organization, as well as work closely at the Global Steel Forum and the Organization for Economic Cooperation and Development Steel Committee. The U.S. has complained that these multilateral forums have done little to tackle overproduction (see 1711300021).
They also said they will share information on trade distortive practices and on how each country does investment screening. The leaders agreed to meet again when they are in Paris at the end of May for the OECD ministerial meeting, "to discuss progress on the above and explore further areas of joint action."
Many Republicans in Congress remain unhappy over the tariffs, and Sen. Jeff Flake, R-Ariz., said he'd introduce a bill to nullify them. Congress would need a veto-proof majority to get it done.