In the previous article, we looked at some differences between the steel tariffs imposed by President Trump and former President Bush. Along with those differences, there are a few other differences that we’ll explore in this article.
Trump has imposed a flat tariff of 25% on all steel imports. In comparison, Bush had imposed tariffs ranging from 8% to 30%. While Trump had previously exempted NAFTA from the stringent Section 232 tariffs, the exemptions were not extended beyond May. In Bush’s steel tariffs, steel imports from NAFTA were exempt from the tariffs.
It’s also crucial to look at the timing of tariffs. In 2002, steel prices were weak amid the global slowdown. There was a series of bankruptcies in the US steel industry prior to the steel tariffs in 2002. However, the US steel industry (CLF) wasn’t really in bad shape prior to Trump’s steel tariffs. On the contrary, US steel prices showed strength in late 2017 and the uptrend continued in early 2018 even before the imposition of Section 232 tariffs. Also, steel prices were looking strong globally. China’s supply-side reforms coupled with decent domestic demand have kept Chinese steel exports subdued, which has lent support to global steel prices (MT).
US steel prices might not have rallied to the levels we saw after Section 232 tariffs. However, the uncertainty in regards to Section 232 exemptions and the trade war scare has taken a toll on steel stocks like U.S. Steel (X), AK Steel (AKS), and Nucor (NUE).
Also, the Trump administration has used Section 232 exemptions as a tool to negotiate better trade deals with other countries. We’ll explore this aspect in the next article.