Trade Cases

Leibowitz on Trade: Finally, a Good Day?

July 26, 2018

Lewis Leibowitz, trade attorney and contributor to Steel Market Update, offers the following commentary on the latest developments in Washington:

Finally, a good day? President Trump and European Commission President Jean-Claude Juncker met Wednesday at the White House and issued a joint statement on their agreement to negotiate reductions in barriers between the U.S. and the EU. The two leaders said at an impromptu press conference that, while negotiations were continuing, neither side would impose new tariffs. This seems to exempt the EU from any new “national security” tariffs on autos and auto parts. Other aims were zero tariffs on industrial goods, and no subsidies on non-auto industrial goods. Soybeans were specifically mentioned in the joint statement, which is significant because of the serious criticism the administration has faced from ag-state members of Congress over Chinese retaliation against U.S. agricultural exports, hitting soybeans particularly hard.

The joint statement also stated the parties’ intention to resolve the steel and aluminum tariffs and the EU’s retaliatory tariffs. This is a tentative sign, but the first positive sign that things may be moving back from the brink. The Dow Jones Industrial Average zoomed 150+ points in the last half hour of trading.

The U.S. and the UK set an agenda for discussions about a new trade agreement commencing with the UK’s withdrawal from the European Union, currently scheduled for next March 29.

The administration is receiving increasing flak from Capitol Hill over the steel and aluminum tariffs. This was clearly a factor in the announcement of a goal to eliminate the steel and aluminum tariffs and the EU retaliation. This “break” (if it is one) cannot come soon enough for U.S. manufacturers, who continue to complain about loss of business and profits due to the Section 232 tariffs. Whirlpool downgraded their earnings projections because of rising steel prices in their appliance businesses. In January, Whirlpool received a boost from a safeguard action on large residential washing machines, which imposed tariffs and quotas on competing machines from Korea and Mexico, among other places. This week, however, Whirlpool claimed that higher steel prices have more than offset the benefits of the safeguard protection. Steel prices, which were traditionally higher in the U.S. than elsewhere, are now more than 50 percent higher than foreign prices, according to Whirlpool, whose earnings forecasts and stock price took a tumble yesterday.

The Photographic Industry Association launched a campaign to educate Congress on the effects of aluminum tariffs on the photographic industry. Photographic plates for industrial use are made largely of aluminum, and prices have skyrocketed since the aluminum tariff was imposed. One more industry with a disturbing story to tell about the collateral damage of trade wars.

Lewis Leibowitz

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