US President Donald Trump has increased tariffs on $200 billion of Chinese goods and imposed restrictions on Chinese company Huawei. The action came after he accused China of reneging on its previous commitments in trade talks. China has retaliated by increasing tariffs on US goods.
While President Trump has taken a tough stance on China, last week, we saw the Trump administration easing up on some of its other trading partners.
Section 232 tariffs
While the Trump administration always maintained that the Section 232 exemptions for Canada and Mexico would be accompanied by quotas, last week, both countries were given full exemptions without any quotas.
The president also lowered Section 232 steel tariffs on Turkey from 50% to 25%. The tariffs were increased last year amid a diplomatic brawl between the two countries, and Turkish steel exports to the United States plummeted due to the exorbitant tariff rate. US steel stocks U.S. Steel Corporation (X) and Nucor (NUE) fell on May 17 after the announcement. However, it’s worth noting that the United States’ preferential trade treatment of some Turkish exports under the GSP (Generalized System of Preferences) program has been withdrawn. Previously, the Trump administration also removed India from the GSP. The country was the biggest beneficiary of the program.
In another move, President Trump extended the timeline for the Section 232 automotive tariffs by up to six months to allow for negotiations. US automotive companies Ford Motor Company (F) and General Motors (GM) don’t favor tariffs on automotive imports given their globally integrated supply chains. With the Trump administration currently engaged in trade talks with China—talks that have turned bitter after the tariff hikes from both sides—its softened stance could at least mean a short-term reprieve for some of its other trading partners.