No news wasn’t good news for U.S. financial markets, which languished Tuesday as Europe refused once again to renegotiate American trade agreements until President Trump permanently exempts the 28-nation block from sweeping metals tariffs.
His administration’s decision Monday to refrain from applying the duties of 25 percent on steel and 10 percent on aluminum for another month merely “prolongs market uncertainty, which is already affecting business decisions,” European trade commissioner Cecelia Malmstrom said in a statement. “We will not negotiate under threat.”
The three major U.S. equity indexes have all declined this week, as a deadline on the tariffs announced in March under national security provisions of federal law passed without a significant decision. Financial markets reacted poorly to the initial duties, as well as to later levies on Chinese imports, with economists and business leaders warning Trump’s protectionist policies might lead to a trade war.
For now, however, the administration is continuing talks with the European Union as well as Canada and Mexico, which are simultaneously renegotiating the North American Free Trade Agreement. Trump said Monday he would continue the temporary extensions for all three trading partners until June 1.
“The president is taking a page out of Congress’ playbook: When at the edge of a policy cliff, build more land,” said Chris Krueger, a policy analyst with Cowen Washington Research Group. “It is a bit surprising to us that the European Union was granted a month exemption without any tangible evidence of progress on quotas. At least Mexico and Canada can point to the ongoing NAFTA talks. Regardless, the can has been kicked and will probably continue to be.”
The metals tariffs followed a report by the Commerce Department that found U.S. steel imports were nearly four times as large as exports and that China produces almost as much as steel in a month as the U.S. does in an entire year. Ten steel furnaces in the U.S. have closed since the turn of the century, and employment in the industry has fallen 35 percent since 1998.
The situation constitutes a “threat to national security” under Section 232 of the Trade Expansion Act, which justifies the tariffs, the department wrote. Trump himself said the duties would revitalize a pivotal U.S. industry, a stance supported by its leaders.
AK Steel applauded the president’s policy in an earnings call on Monday and urged him to go further, while Nucor expressed disappointment Tuesday at the postponement.
“This delay is an invitation to foreign steelmakers to dump every ton they can into the U.S. market before the tariffs go into effect,” the Charlotte, N.C.-based company said in a statement. “If our words are to have meaning, we must follow through on our promises.”
Nucor shares fell 2.5 percent to $60.09 in New York trading on Tuesday, while U.S. Steel tumbled 6.9 percent to $31.51. AK Steel dropped 8.5 percent to $4.20.
— With assistance from Joe Williams.
