Commentary: U.S. aluminium tariffs; collateral damage and a missed target – by Andy Home (Reuters U.K. – June 1, 2018)

LONDON (Reuters) – So the trade wars begin. As of today the United States will impose tariffs on imports of steel and aluminium from Canada, Mexico and the European Union (EU). Canada and Mexico have already responded in kind. The EU won’t be far behind.

Steel and aluminium are but pawns in a bigger trade game, the unique characteristics of each supply chain forgotten as the U.S. administration ratchets up the negotiating pressure on its NAFTA partners and adds autos to its list of grievances with the EU.

The loss of focus is a shame because aluminium in particular shows why tariffs are such a poor trade weapon, managing both to cause maximum collateral damage and miss the prime target. Which is China.

It is China’s dominance of the aluminium supply chain that lies at the heart of the industry’s problems, both in the United States and everywhere else. The country produces more than half of the world’s aluminium and has been exporting massive quantities for many years.

The Trump administration’s trade salvoes won’t change that reality.

But they have galvanised a coalition of national industry bodies, including the United States’ own Aluminum Association (AA), to try and push China rather than tariffs onto the aluminium agenda at next week’s G7 summit in Canada.

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