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US: Trump administration moves to a more hawkish stance – Nomura

The Trump administration announced yesterday that it will impose steel and aluminum tariffs on the EU, Mexico and Canada after a temporary exemption expired last night, notes the research team at Nomura.

Key Quotes

“This is the first time that the Trump administration has imposed meaningful tariffs on imports from these major trading partners. Consequently, today’s announcement marks a notable shift in policy. Moreover, this comes at a time of increased US-China trade tensions with Commerce Secretary Ross’ upcoming trip to Beijing.”

The EU, Mexico and Canada lose their steel and aluminum tariff exemptions

On 1 March, the Trump administration announced blanket tariffs on steel and aluminum imports (25% on steel, 10% on aluminum). It then granted temporary exemptions to many trading partners that were set to expire 1 May before 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. Yesterday, the administration announced that the EU, Canada and Mexico would not receive another temporary exemption and would face the tariffs starting 1 June.

The temporary extension for the EU, Mexico and Canada ensured that the top suppliers of steel (47%) and aluminum (49%) products covered by the Section 232 investigations would not be disrupted. Thus, allowing the tariffs to go into effect on 1 June could materially disrupt some business activity and pose downside risk to business confidence.”

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