Davies steps in over Trump’s ‘steel war’

Minister of Trade and Industry, Dr Rob Davies, has assured steel producers that he is “engaging with the US” following the announcement last week by President Donald Trump of the imposition of a 25% global tariff on imports of steel and 10% on aluminium – applicable to all importers into the US market.  Should South Africa’s steel industry collapse, it could take up to a decade to re-establish the infrastructure, skills, logistics network and downstream industries required for a viable and thriving local steel industry, said ArcelorMittal South Africa chairman Mpho Makwana in the wake of the Trump announcement. While the White House, the office of the US trade representative (USTR), and US commerce department have yet to release official statements on the duties and how they will be implemented, Trump has been defiant in the face of global criticism and warnings about trade wars, stating on his Twitter account that “trade wars are good”. The International Monetary Fund (IMF) warned in a statement last weekend that this move by Trump would hurt the US as well as the countries affected as they could follow his example and retaliate with major tariffs in return. While World Trade Organisation (WTO) chief Roberto Azevedo cautioned that “a trade war is in no one’s interests”, European Union (EU) officials are reportedly considering slapping 25% tariffs on around US$3.5bn of imports from the US. The Canadian government, which supplies a big chunk of US steel, has also warned of retaliation if Trump pushes through with his threat. South Africa’s steel exports to the US are insignificant compared to its top 10 suppliers – including Canada and the EU – but it still saw revenue of an amount of US$950 million in steel exports last year according to Department of Trade and Industry (dti) figures. An amount the local steel industry – hit by cheap imports, low commodity prices and labour unrest since 2015 – can scarcely afford to lose. South African aluminium exports amounted to US$375 million in 2017. “The dti is also meeting with South African companies with export interests in the US to ascertain the possible impact of the proposed measures on these companies,” said Davies. His department was also assessing the compatibility of the proposed measures with the rules of the WTO, he added. “In addition, South Africa, through the dti, is a member of both the OECD (Organisation for Economic Co-operation and Development) and G20 steel committees and will be represented at senior management level at the meetings of they multilateral institutions when they meet next week. The proposed US steel trade measures will be discussed at these meetings,” he said. Earlier this year chief economist for the Steel and Engineering Industries Federation of Southern Africa (Seifsa), Dr Michael Ade, highlighted the potential for retaliation from many overseas trading partners in order to protect their steel industries. “These latest developments have the potential of further dampening production in the local steel industry, reducing steel exports to the US, squeezing margins and depriving the steel industry of much-needed foreign reserves,” he said.