SMART MOVE BY THE US TO PUSH FOREIGN STEEL COMPANIES INVEST IN THE USA

Updated: Mar 11, 2018

Following the Secretary of Commerce’s report on his findings into the effect of the imports of steel mill articles on the national security of the United States under Section 232 of the Trade Expansion Act of 1962, on March 8th, 2018, President Trump signed a proclamation on adjusting imports of steel into the United States by imposing 25% ad valorem tariff on steel articles imported from all countries except Canada and Mexico.


In the proclamation, failure of countries address global excess capacity and also damage caused by excessive imports from those countries to the US domestic steel industry and national security are stated as the main arguments behind that decision, and also while Canada and Mexico are kept aside and excluded, the other countries which have security relationship with the USA are also welcomed to renegotiate. President Trump defined this approach as “showing great flexibility and cooperation toward those that are friends and treat us fairly on both trade and military”. This statement while creating ambiguity for all parties, it could also be considered very smart move on the US side as it pushes its trading partners to renegotiate the trade imbalances and provide remedies in return of being exempted from 25% increase of tariff on imported steel. 


Having said that the proclamation signed by President Trump and the EU’s reaction to it shows us how we, all, lost hope and trust in multilateral trade negotiation platforms i.e. WTO and moving more into bilateral trade deals which will make the international trade less transparent than ever and put extra burden on the countries who hold no power against countries like the US at the negotiation table.


Furthermore according to the proclamation “countries who have security relationship with the USA” might be considered for the exclusion from the newly approved measure on steel import. As being involved in Turkish steel industry for many years, I am very much interested in potential impacts of the mentioned measure on Turkey – US steel trade relation.


As we, all, would recognize, even though rocky relationship we observed between Turkey and the USA over the last year, both countries are part of NATO and have strong security relationships. Given that relationship, should we expect the USA asking Turkey provide voluntary steel export restriction type remedies which are against WTO, or should we expect the remedies asked by the USA go beyond the trade and move into the more political type of remedies? While these questions yet to be answered in the future by the politicians, my suggestion, as international trade and investment consultant to the individual companies is to consider opening their plants in the USA which will give them direct access to not only the lucrative US but also Canada and Mexico markets. 


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