Washington | Malcolm Turnbull left Washington DC on Sunday unsure whether Australian steel and aluminium would be exempted from stiff tariffs about to be imposed by President Donald Trump, despite receiving assurances last year they would be spared.
Over the past two days, Trade Minister Steven Ciobo directly lobbied his US counterparts during meetings in Washington while Mr Turnbull raised it directly with Mr Trump at the White House.
“The BlueScope (Steel) business alone employs 3000 people in the United States. The President and I discussed that, the position of our steel exporters, both (at last year’s G20) in Hamburg and here,” Mr Turnbull said.
“We believe we have made a very compelling case, but obviously the administration has to finalise its decision in this area.”
As he flew out, it was reported that Mr Trump will use a rally in rust belt state Pennsylvania soon to impose a 24 per cent tariff on all steel imports, the toughest of three recommendations made to him by the US Commerce Department. The aluminium tariff could be as high as 10 per cent, according to a report by Bloomberg.
This is higher than the recommended 7.7 per cent on aluminium and would put Rio Tinto’s Canadian aluminium smelters in the firing line.
Australia has strong support inside the Trump administration.
US Defence Secretary James Mattis wrote to the White House suggesting “targeted tariffs” that don’t hit defence allies.
“It is critical that we reinforce to our key allies that these actions are focused on correcting Chinese overproduction and countering their attempts to circumvent existing anti-dumping tariffs,” he wrote.
At the G20 leaders’ summit in Hamburg in July last year, the Prime Minister and Finance Minister Mathias Cormann received assurances from Mr Trump and US Treasury secretary Steve Mnuchin that Australia would be spared the tariffs.
The Australians had argued that ongoing overproduction and dumping by China were the cause of Mr Trump’s concerns. Australia was a strong ally of the US, its steel and aluminium a relatively small source of imports, and should therefore be spared.
Amid signs the US has gone cold on any exemptions Mr Ciobo made these same points again in meetings with both US Commerce Secretary Wilbur Ross and US Trade Representative Robert Lighthizer.
“I took the opportunity to reinforce the outcome that was reached at the G20,”‘ Mr Ciobo told The Australian Financial Review.
He stressed to the Americans that Australian steel imports were “a very small percentage of the US domestic market”.
It is understood Mr Ciobo was told the final decision rests with the President who has the power to grant carve-outs.
Mr Turnbull argued for a complete exemption from both tariffs and quotas.
Rio Tinto chief executive Jean-Sébastien Jacques said Canada was an integral part of the US aluminium supply chain.
“If you are an aluminum consumer in the US what you want is low-carbon and low-cost aluminum and the best way to have access is through Canada,” he said.
BlueScope’s US subsidiary, Steelscape in California and a Washington state plant, import steel from its Australian and Asian operations to manufacture annually 446,000 tonnes of metal-coated steel and 332,000 tonnes of painted steel coils for non-residential buildings and construction in the US.
A second Commerce Department option given to Mr Trump provides possible relief for BlueScope’s Port Kembla steel exports and Rio’s Canadian aluminium smelters.
It proposes harsher steel tariffs of 53 per cent on imports from a list of 12 countries including China, Brazil, India, South Africa and Vietnam.
aluminium would face a 23.6 per cent tariff for products from China, Russia, Venezuela and Vietnam.
Under this option, BlueScope and Rio would be exempt from tariffs, but face a new maximum import quota equal to their 2017 shipments to the US.
The third option the commerce department proposed is a tougher quota on all imports from all countries equal to 63 per cent for steel and 86.7 per for aluminium, compared to total country sales to the US in 2017.
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