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Reactions to US steel, aluminum import tariffs

Governments, industry bodies, companies and analysts are reacting to U.S. President Donald Trump's announcement of additional duties on steel and aluminum imports to the U.S. The duties will amount to 25% on steel and 10% on aluminum imports.

This commentary piece will be updated as more statements become available.

BHP: Trump tariffs a 'black day for the world'

BHP Billiton Group chief executive Andrew Mackenzie told a conference in Sydney that the tariffs represented a "concerning" sentiment shift away from free trade.

While Mackenzie noted it was too early to judge how the new measures might affect BHP, he described the American decision as a "black day for the world and business."

"Outside of the U.S. the sense that I have at the moment is that people are re-embracing free trade after a bit of a wobble, partly driven by the result of several elections," he said.

France: Macron calls for WTO action

French President Emmanuel Macron denounced the U.S. policy as "economic nationalism" and has urged the European Union and the World Trade Organization to take action. If the tariffs are put into effect in their current form they would amount to a violation of WTO rules, he flagged.

"It is important in this context that the European Union react quickly in the framework of the WTO in an appropriate manner," said the French president at a joint press conference with Phillippe Coutillard, Premier of Quebec.

Coutillard said that the new tariffs would impact U.S. consumers first as they will be forced to pay higher prices for steel and aluminum products.

RBC: Impact on mining sector could be positive

Analysis by RBC Capital Markets indicates that the overall impact on the metals and mining sector might even be positive, though the team said volatility is initially likely to ruffle sectors.

"We expect multiple developments this week and beyond which are likely to contribute to current share price volatility," the team said in a March 5 note. "The potential for a global demand slowdown should trade wars escalate is an obvious risk in our view, but we also note the much improved financial position the sector largely finds itself in, which should insulate the sector far better than in recent downturns."

On the investment front, the mining sector at large could see a rise if the U.S. dollar further weakens and structural inflation moves higher.

U.S. Republican rift

U.S. Speaker of the House Paul Ryan released a statement, saying he was "extremely worried" about the tariffs triggering a trade war.

"The new tax reform law has boosted the economy and we certainly don't want to jeopardize those gains," said Ryan's spokesperson AshLee Strong.

Responding to Ryan's comments, Trump later said there was no intention in backtracking on the steel and aluminum tariffs.

Trump: Mexico, Canada may be exempted from tariffs if 'new & fair' NAFTA deal signed

President Donald Trump said that the tariffs might be off the table if a "new and fair" NAFTA agreement is signed. In a tweet, the American president hinted that Mexico and Canada might be exempted, while calling on Canada to treat U.S. farmers better, and urging Mexico to "do much more" to prevent narcotics from entering the U.S.

Earlier on Twitter, Trump threatened to slap a tax on car imports from the EU, if the bloc moves to implement retaliatory tariffs in response to potential duties from the U.S. The president said there was a "big trade imbalance" and that the EU makes it "impossible for our cars [and more] to sell there." The tweet came in response to a speech by European President Jean-Claude Juncker, in which he said the EU would draw up a list of American goods targeted for retaliation.

"We will impose tariffs on motorbikes - Harley-Davidson -, on blue jeans - Levi's -, and on bourbon. We can also do stupid," said Juncker.

IMF: Restrictions can cause damage outside the U.S. and to the U.S. economy itself

The International Monetary Fund warned that the restrictions could cause damage both outside the U.S. and to the U.S. economy itself, including to its manufacturing and construction sectors, which are major users of aluminum and steel.

"We are concerned that the measures proposed by the U.S. will, de facto, expand the circumstances where countries use the national-security rationale to justify broad-based import restrictions," IMF spokesman Gerry Rice said. "We encourage the U.S and its trading partners to work constructively together to reduce trade barriers and to resolve trade disagreements without resort to such emergency measures."

Australia opposes putting up trade walls

Australian Trade Minister Steve Ciobo said that it was not yet clear to what extent Australia would be affected by the proposed the tariffs. In an interview, he said that he felt Australia should also be exempt and warned this may be the first of many moves towards greater protectionism on world markets.

He noted that he had spoken with Australian Senator Zed Seselja in the event that, following the implementation of the U.S. tariffs, the Australian market is flooded with cheap steel products. Ciobo stopped short of saying that Australia would implement retaliatory measures, stressing that the country already has an Anti-Dumping Commission and opposes the policy of putting up trade walls.

Mexican steel seeks exemption

The Mexican Iron and Steel Industry Chamber said it hoped that Mexico would not be included in the steel and aluminum tariffs and that the Mexican government should implement retaliatory measures.

"The measures that are put forward by Mexico should not only mirror those of the U.S., they should also serve a tool to prevent the wave of imports targeting third markets, as Mexico is very attractive because of its growing steel consumption," said the statement.

The Chamber insisted that Mexican steel was not a threat to the U.S. and that the tariffs could cause a trade war to break out that would affect the production chains in both Mexico and the U.S.

BCS Global Markets assesses impact on Russian producers

Analysts at BCS Global Markets told S&P Global Market Intelligence that the import duties would mainly affect Russian producers PJSC Novolipetsk Steel and Evraz Plc, as they export relatively large volumes to the U.S.

"The 25% duty on steel and 10% duty on aluminum by the U.S. against most suppliers is negative sentiment wise for NLMK [1.5 million tonnes of slab], Evraz [500,000 tonnes of slab] and Severstal [300,000 tonnes of finished steel]," said analysts, adding that Evraz and NLMK are likely to continue supplying, as the price of the final product will rise, while Severstal will probably redirect exports.

On the aluminum side, they said Russia's largest producer, United Company RUSAL Alumina Ltd., would barely be affected, as only 10% to 15% of volumes are sold to the U.S. and could be redirected elsewhere.

Overall, BCS sees no major impact for Russian steel stocks in the short term.

Aluminum Association welcomes the move

The Aluminum Association, based in Arlington, Virginia, welcomed the White House's Section 232 announcement.

"We appreciate the President's commitment to strengthening the U.S. aluminum industry," the association said in a statement. "We look forward to working with the President on implementation and to creating a more level playing field."

Argentina: Steel chamber flags knock-on effects for US oil industry

Argentina's Steel Chamber said the measures could have a significant knock-on effect on the oil industry in the U.S. once implemented.

"In 2017, Argentina exported over 200,000 tonnes of seamless steel tubing. This is a value-added product used by the oil industry, the export of which could be significantly impacted by the tariffs," the chamber said in a statement.

Canada: Restrictions on Canadian steel, aluminum 'unacceptable'

Canada's Minister of Foreign Affairs called restrictions on Canadian steel and aluminum "absolutely unacceptable" and threatened "responsive measures."

"Any restrictions would harm workers, the industry, and manufacturers on both sides of the border," Chrystia Freeland said. "The steel and aluminum industry is highly integrated and supports critical North American manufacturing supply chains. The Canadian government will continue to make this point directly with the American administration at all levels."

Freeland noted that the U.S. has a US$2 billion surplus in steel trade with Canada, adding that at 50% of U.S. exports, Canada buys more American steel than any other country in the world.

"Should restrictions be imposed on Canadian steel and aluminum products, Canada will take responsive measures to defend its trade interests and workers."

Canada: Steel trade between Canada and US is fair, fully integrated, mutually beneficial

The Canadian Steel Producers Association said the steel trade between Canada and the U.S. does not threaten the latter's national security.

"If Canada is ultimately included in the measures announced yesterday by President Trump, this will serve to undermine that long-standing relationship by threatening steel supply chains in both countries and will negatively impact Canadian investment and employment in steel," the group said. "The measures as announced would harm Canadian interests not only by diminishing access to the U.S. market, into which over 40% of Canadian steel is currently exported, but also by diverting significant volumes of foreign steel originally intended for the U.S. market into Canada."

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Brazil: Retaliatory actions not ruled out

Brazil's government has not ruled out retaliatory measures to protect its interests, according to a statement by the country's Industry Ministry.

The ministry insists that Brazilian steel does not represent a threat to North American national security.

"The steel industries of both countries complement one another," the ministry said in a statement, noting that about 80% of its steel exports are semi-finished products and represent an important input for the American steel industry.

Germany: Steel federation calls on EU to act swiftly, systematically

Germany's steel federation, Wirtschaftsvereinigung Stahl, urged the European Union to act swiftly and systematically to defy the U.S. import barrier.

"These measures clearly violate World Trade Organization rules," the federation's president, Jürgen Kerkhoff, said in a statement.

In response to the tariffs, he expects that a large part of the 13 million tonnes by which the U.S. plans to reduce imports will be redirected to EU markets, which does not impose tariffs.

"If the EU does not take action, our steel industry will pay the price for U.S. protectionism," Kerkhoff said.

China: 'US ignores WTO rules'

China said the U.S. ignored World Trade Organization rules in its decision and severely impaired the interests of Chinese exporters.

Head of the Chinese Ministry of Commerce's Trade Remedy and Investigation Bureau, Wang Hejun, said that during the antidumping investigation, the U.S. Department of Commerce regarded China as a "non-market economy country," allowing them to rule a high antidumping rate of 48.64% to 106.09%.

"The unreasonable and excessive use of trade remedy measures will not realize the renaissance of the US aluminum foil industry but will affect its domestic employment and impair the interests of US consumers," he said in a statement March 2, adding that China would adopt the necessary measures to protect their rights.

China: Tariffs a bigger threat for aluminum producers than steel mills

Analysts told S&P Global Market Intelligence that the tariffs are more likely to threaten Chinese aluminum producers than steel mills.

While Chinese steel mills have been well supported by the rapid price increases in the domestic market, the situation is much worse for aluminum producers, as the U.S. is the top buyer of China's aluminum exports, Liu Xinwei, an analyst with commodities consultancy SCI International, told S&P Global Market Intelligence.

Xu Ruoxu, a nonferrous metals analyst with SWS Research, echoed this sentiment, saying the planned tariffs will worsen oversupply in China and hit aluminum prices.

Russia: 'Situation requires utmost attention'

Press secretary to the Russian president, Dmitry Peskov, expressed concern over Trump's announcement and said the Kremlin would monitor the situation.

"This situation requires our utmost attention. We know that many European capitals have already expressed their concern over the decision. We share this concern and we are thoroughly analyzing the consequences for trade relations following the statement," said Peskov at a March 2 press conference.

Asked whether or not the tariffs were an anti-Russian measure, Peskov said the tariffs target many countries, not just Russia.

Europe: Tariffs are 'blatant intervention'

The European Commission responded sharply to the news, condemning the step as "blatant intervention" to protect the U.S. domestic industry with no tangible national security justification.

"Protectionism cannot be the answer to our common problem in the steel sector. Instead of providing a solution, this move can only aggravate matters," President of the European Commission Jean-Claude Juncker said in a statement March 1.

He said the EU would react accordingly to defend its interests and will put forward a proposal in the next few days for WTO-compatible countermeasures against the U.S. "to rebalance the situation."

PAO Severstal: US is not major target market

Severstal, one of Russia's largest steel producers, told S&P Global Market Intelligence that the U.S. was not one of its major target markets and it could easily diversify.

"In 2017 we supplied only 2% of our products (to the U.S.). Therefore, we will be able to redirect those volumes to other export markets easily," the company said.

However, the company stressed that any restrictions disrupt the global trade environment and impact all the market players negatively, including U.S. producers.

UBS: 'These tariffs are unlikely to be the last'

Economists from investment bank UBS said the tariffs are unlikely to be the last.

"Although pressure from Congress and some industries where these tariffs are less popular is likely to build, we believe the Administration is sincere in its effort to use trade policy to support American industries," the team said in a March 1 note.

UBS expects a small effect on the U.S. economy as a result of the tariffs but flagged potential downside risks if other countries retaliate or the U.S. economy turns out to be more dependent on steel than anticipated.

"We see the steel tariffs action as having potentially meaningful effects on Canadian, Brazilian, European, and Russian steel markets. The tariff on aluminum is small enough that we don't think it has [a] large effect on foreign production."