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U.S. Removes Tariffs on Steel and Aluminium Imports from Canada and Mexico, Halves it for Turkey

 

 After a year of friction, the Trump government has finally decided to resolve its differences with the neighboring countries Canada and Mexico by lifting tariffs of 25% and 10% on steel and aluminum imports respectively.

The duties were levied by U.S. on the import of steel and aluminum from all the countries in March last year under section 232 of Trade Expansion Act based on the grounds of national security.

This decision sparked tit-for-tat duties from Canada and Mexico on U.S. farming goods and other products, and became an obstacle for lawmakers in all three nations to ratify the U.S.-Mexico-Canada (USMCA) Agreement which replaced the NAFTA (North American Free Trade Agreement) between the three countries last year.

However, with the U.S. announcement of removal of duties, Canada and Mexico have responded that they will lift retaliatory duties on U.S. products as part of the deal, which will take effect within two days.

As part of the agreement, the U.S. will be able to re-impose the tariffs on metals imports if not enough is done to prevent any surge of metals imports beyond historical levels. The nations have also agreed to ramp up efforts to trace where the metals have come from originally, to stop the diversion of shipments from other nations to dodge tariffs.

As per the market participants, this move coupled with the lifting of retaliatory duties will bring relief to the American farmers and manufacturers. The easing of trade tensions in North America could give Mr. Trump more support in its trade war with China, which has imposed tariffs on American products in retaliation for the recent president’s levies on USD 250 billion worth of Chinese goods.

In case of Turkey, the Trump administration has trimmed special tariffs on steel imports from the country to 25% after having raised the duty to 50% in August 2018.

During last year’s spat, Trump had imposed higher tariffs on imports of Turkish steel and aluminum to put economic pressure on Turkey to force it to release Andrew Brunson, an American pastor who was detained there over terrorism charges. Brunson was released last October. This move by U.S. government had sent Turkish currency Lira into a tailspin which depreciated significantly and made its steel industry to suffer badly as U.S. is one of the key export markets for Turkey.

How did steel import dynamics change in 2018?

In 2018, the U.S. imported 30.8 MnT of steel, an 11% decrease from 34.5 MnT in 2017. U.S. imports in 2017 represented about 9% of all steel imported globally.

From 2017 to 2018, the volume of U.S. imports decreased from 8 of the United States’ top 10 import sources. Imports from Turkey (-47%), showed the largest volume decline in 2018, followed by South Korea (-26%), Japan (-20%), Russia (-18%), Taiwan (-15%), Brazil (-11%), Germany (-6%), and Canada (-1%). The volume of U.S. imports only increased from Vietnam (45%) and Mexico (9%).

In 2018, Canada exported about 6.5 MnT of steel, a decline of 2% against last year. The country’s exports to U.S. also registered a decline of 2% in 2018 y-o-y basis.

Turkey was the world’s eighth-largest steel exporter in 2017. In 2018 Turkey exported 19.8 million metric tons of steel, a 22 percent increase from 16.2 million metric tons in 2017. Notably, Turkey’s steel exports to U.S. plunged by 38% y-o-y basis in 2018.

Source: Steel mint

 

 

 

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