US: Delayed decision on permanent steel and aluminum tariff exemptions – Nomura

On March 1, the Trump administration announced blanket tariffs on steel and aluminum imports (25% on steel, 10% on aluminum) and recently, the administration extended the temporary exemption period for an additional 30 days for the EU, Canada and Mexico, while granting longer-term exemptions for Argentina, Australia, Brazil and South Korea, points out the research team at Nomura.

Key Quotes

“Overall, we view the delay as another example of tough rhetoric but less follow through for the administration when it comes to protectionist policies. With that said, however, we continue to view the ongoing Section 301 intellectual property dispute with China as the greatest trade risk.”

“The steel and aluminum tariff exemptions for Argentina, Australia, Brazil, Canada, Mexico, and the EU were extended while a previously discussed long-term exemption for South Korean steel imports was also formally announced. The administration also announced an agreement in principle for longer-term exemptions for Argentina, Australia and Brazil, possibly mirroring the quota agreement with South Korea.”

“The extensions for Canada and Mexico were widely expected given the recent progress, and the optimism for a conclusion in the next several weeks, on NAFTA negotiations.”

“Whether a long term deal for the EU can be reached over the next month remains uncertain. Canada, Mexico and the EU now face a deadline of 1 June to reach a longterm agreement (Argentina, Australia and Brazil face no expiration date).”