Chairman, CEO and President of Nucor John Ferriola and U.S. Steel CEO Dave Burritt flank U.S. President Donald Trump as he announces that the United States will impose tariffs of 25 percent on steel imports and 10 percent on imported aluminum during a meeting at the White House in Washington, U.S., March 1, 2018. - Reuters
SEOUL: President Donald Trump’s planned tariffs on steel and aluminum put America’s leading Asian allies in a tough spot Friday, driving down stock prices and generating last-minute lobbying for a change of heart.
Japan’s Nikkei Stock Average closed Friday down 2.5% and South Korea’s benchmark average was down 0.9% in afternoon trading, with steelmakers falling more. South Korea’s Posco, one of the world’s largest steelmakers, fell more than 3%.
“I believe there is absolutely no impact on America’s national security from imports of steel and aluminum from Japan, which is an allied nation,” said Japanese trade minister Hiroshige Seko. “I would like to look for opportunities to make this point firmly to the American side.”
Mr. Trump said Thursday he intended to impose 25% tariffs on steel imports and 10% on aluminum. He invoked a little-used Cold War-era law that gives presidents broad discretion to curb imports deemed a threat to national security, following Commerce Department studies that concluded metals imports had eroded America’s ability to make its own weapons.
The leading U.S. military allies in East Asia, South Korea and Japan, are also both large steelmakers. The tariffs, if made final, would ratchet up economic tensions with the two allies at a time when they are working to counter the threat from North Korea developing nuclear-tipped ballistic missiles capable of hitting the continental U.S.
South Korea’s trade minister, Kim Hyun-chong, has been in the U.S. since Feb. 25 to meet U.S. members of Congress and policy makers including Commerce Secretary Wilbur Ross. The trade ministry said Friday it would actively pursue talks “until the U.S. government makes a final decision.”
Mr. Seko said Mr. Trump didn’t list the countries to be targeted by the tariffs, hinting at hopes that Washington might exempt its allies while targeting big steel exporter China. The president said he would give concrete details next week.
Kosei Shindo, head of the Japan Iron and Steel Federation, said earlier this week that U.S. steel tariffs could trigger a global trade war. “If trade restrictions are being put in place one after another, you’re opening a Pandora’s box and that’s the scariest part,” Mr. Shindo said.
South Korean President Moon Jae-in told deputies last week that they should actively complain to the U.S. if they perceive unfairness on the U.S. side. He said they should see whether proposed curbs on steel and aluminum imports violated a U.S.-South Korea two-way free-trade pact or World Trade Organization rules.
Under Mr. Trump, the U.S. is already at loggerheads with South Korea in several trade disputes. The U.S. has placed anti-dumping duties on South Korean steel and transformers, while placing tariffs in a separate case that affect South Korean washing machines and solar panels. Seoul has taken initial steps to challenge those moves at the WTO.
Under Mr. Trump’s two predecessors, the U.S. and South Korea negotiated and completed a free-trade agreement that came into effect in 2012. Mr. Trump says it was a bad deal that widened the U.S. trade deficit, but the two sides haven’t agreed how to revise it.
Analysts said one reason for the stock drop Friday was fear about a broader trade war between the U.S. and China. Takashi Ito, strategist at Nomura Securities, said there might be a “game of tit for tat” between the world’s two biggest economies, and “it’d take time for them to stop fighting.”
The yen’s rise to a two-week high against the dollar also weighed on Japanese stocks. Analysts have said a weak-dollar policy might be another way for the Trump administration to achieve its stated goal of rebalancing trade in favor of Americans.
Baek Jae-seung, a steel industry analyst of Samsung Securities in Seoul, said U.S. tariffs wouldn’t necessarily be all bad for South Korean exporters in the long term because they would eventually lead to higher steel prices globally—a potential boon to some competitive South Korean steelmakers. - WSJ
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