00:00President Donald Trump has promised to hike nearly all of his tariffs on foreign steel and aluminium to a punishing 50%.
00:08The deadline's this Wednesday a move that experts say would hammer businesses from carmakers to homebuilders
00:14and likely push up prices for consumers.
00:16Meanwhile, the White House has officially asked Congress to claw back $9.4 billion in already approved spending,
00:23taking funding away from programs targeted by Elon Musk's Department of Government Efficiency.
00:28It's a process known as rescission, which requires Trump to get approval from Congress to return money that had previously been appropriated.
00:36Well, the latest then, U.S. stocks drifting in tentative trading following a potentially discouraging signal on the job market and the economy.
00:47Canada's steel industry was already feeling the heat from Donald Trump's 25% tariffs on steel and aluminium imports.
00:55Now, with the levy doubling to 50%, the sector is bracing for a full-blown meltdown.
01:01Basically consider the U.S. market closed, completely closed, door slammed shut, if you will, to Canadian steel.
01:09So this is our SOS moment, I'm calling it. We need urgent action.
01:14There's anger across the border after the U.S. president signed an executive order Tuesday,
01:19cranking up import taxes for U.S. companies buying the key materials from elsewhere.
01:25Canada is the largest supplier of steel and aluminium to the U.S.
01:29Mexico is the third.
01:31The U.S.'s southern neighbour had slammed the tariff increase as unfair and unsustainable
01:35for a country that actually buys more U.S. steel than it sells.
01:40President Scheinbaum says she's prepared to hit back.
01:42If they do not reach an agreement, then next week we will also be announcing some measures that we would be taking,
01:49which is not about an eye for an eye, but rather about the protection of our industry and our jobs.
01:55Mexico had been hoping to secure an exemption like the U.K.
01:58It's been spared from the hike after being the only country to strike a trade deal with the U.S.
02:03during the 90-day pause on Trump's tariffs.
02:06The U.S. also wants a similar agreement, or it could resort to retaliating with a previously agreed
02:1221 billion euro package of levies on U.S. exports.
02:16The two sides did strike a more conciliatory tone after talks on the sidelines of an OECD gathering in Paris Wednesday,
02:24but the U.S. trade commissioner did make the bloc's frustration clear.
02:27Of course, we discussed this with the U.S. trade representative, Ambassador Jameson Greer,
02:35and I told him that we strongly regret this latest U.S. decision,
02:42and I explained to him that it clearly doesn't help the ongoing negotiations,
02:48especially as we are making progress.
02:51For Trump, this latest increase is aimed at breathing new life into domestic production of the key materials,
02:58but the U.S. faces several structural challenges to achieving this.
03:03The tariffs from Trump may ignite his fan base, his voters, those who see him as the MAGA messiah.
03:10However, from the business level and from the world of commerce, there is a different story emerging.
03:15Let's bring in for a better and broader analysis, Gavin Bade.
03:19Gavin writes on trade and economic policy for The Wall Street Journal.
03:22The Wall Street Journal, one of my favorites.
03:24So, Gavin, it's a pleasure to have you on the program to shine your light upon this topic,
03:29which I think many people don't quite see what it means.
03:32But this is, I think it's fair to say, something that is going to touch everybody across the world in some way, shape or form.
03:39Yes, I think, you know, steel, aluminum, two very, you know, primary materials for, you know,
03:44building materials, buildings, pipelines, everything across the world.
03:47And I think this will reverberate through, you know, every country, basically.
03:52And I think we have yet to see if there will be deals struck with other nations.
03:55As you said, a lot of countries are looking for similar arrangements to what the U.K. received
04:01when they got a break on the steel tariffs and they got a quota on their automotive tariffs
04:06so they can export a certain amount to the U.S. before tariffs kick in.
04:09I think you're going to see a lot of countries trying to drive that bargain with the U.S.
04:13I'm not so sure the Trump administration is very amenable to that right now.
04:17My sources close to the administration have have said since the U.K. deal
04:20that they don't want to give more wiggle room on those national security tariffs,
04:26these so-called Section 232 tariffs.
04:28Remember, these are different entirely from the Liberation Day tariffs that were questioned in court,
04:35actually ruled illegal by by a court last week.
04:38And then the Trump administration appealed.
04:40That didn't touch any of these steel-aluminum tariffs at all.
04:44And so I think you're going to see those enter more into these discussions about the Liberation Day tariffs as well.
04:50But 50 percent, I mean, say it ain't so, is Trump going to go through with this
04:54or is this some kind of Trumpian brinkmanship at work?
04:58I think he's going to go through with it at least for many economies.
05:02I mean, the real target here is the Chinese economy.
05:05And the reason they did this is because steel workers and steel executives in the U.S.
05:09told the Trump administration that even 25 percent tariff was not enough to block Chinese steel from coming into the country.
05:17And the question then is, well, why hit the rest of the world?
05:19And the answer is because the administration is worried about what's called transshipment.
05:24So Chinese companies exporting to another country, a third country, where they will alter the steel.
05:30Maybe they roll the steel.
05:31Maybe they alter it a little bit.
05:33And then they say, oh, actually, this steel is from Korea or this steel is from somewhere else.
05:37And then they export it to the U.S.
05:39So to stop that transshipment problem, their solution is a blunt one.
05:44We're just going to tariff everyone across the world to make sure that Chinese steel can't find its way into our economy with a lower tariff.
05:51Now, obviously, there is a lot of collateral damage that results from a tariff decision like that.
05:57But they would say it's worth it because they want to see the U.S. productivity of the U.S. steel industry really grow here.
06:05And I think that's the constituency he's really looking at.
06:08The steel companies and the steel workers in the United States are an extremely politically powerful constituency here.
06:15You know, they're located in a lot of swing states.
06:18Their union is still very organized, even in an economy where there isn't much union power.
06:23And so they get most of what they want out of, you know, both Democratic and Republican administrations.
06:28So I think he's really trying to please the steel workers and the steel industry here.
06:32Indeed.
06:32It's got that Make America Great Again sort of stamp all over it, hasn't it, in many ways.
06:37That Rust Belt area that you're talking about, Gavin, of course, are very much the target audience.
06:44But as you say, world markets are affected too.
06:49Business these days is, of course, intertwined, joined up across the globe.
06:54Imports, exports.
06:55There are many products that, of course, have several components from different countries involved in it,
06:59even if it's ostensibly made in one particular country.
07:02So the question is, after that very long preambulation, will Trump eventually be bitten back by this?
07:09Will this backfire on him in some way, do you think?
07:13I think that it could.
07:15I think the most immediate way that it could backfire is by derailing some of these negotiations that have been ongoing with the EU, with Japan, with other nations, right?
07:23They're going to say, well, we thought we were having good conversations.
07:27And then you just spring this tariff increase on us just out of nowhere.
07:30And they didn't really notify any allies or trading partners before they did this.
07:34And so I think a lot of foreign governments in the near term are going to think, what is the wisdom of making a trade deal with the United States,
07:41especially if it doesn't specifically address these sector-specific tariffs, whether on steel, automobiles, lumber, pharmaceuticals, semiconductors, all of these.
07:52He keeps hitting all of these industries with tariffs on top of the reciprocal tariffs that were applied to every nation in their own way, right?
08:00And so I think if people think that he's just going to keep doing this and keep rolling out these Section 232 national security tariffs,
08:09it may be very difficult for him to come to a deal on this.
08:12And then longer term, I think you might see some impacts in the U.S. economy as well, some rising costs,
08:18especially for American manufacturers that perhaps import a type of specialty steel that is not made in the U.S.
08:26Trump would say, well, we want them to make that in the U.S.
08:28But that doesn't just happen overnight, right?
08:31So I think you will see some ripple effects with like small, medium-sized, and even large U.S. manufacturers
08:36who have to get something from overseas.
08:39Gavin Bate, you're welcome anytime, sir.
08:42Thank you very much for shining that light on this topic of Trump's tariffs.
08:45We wait to see, of course, the size and the effect.
08:48But Gavin Bate giving us a real introduction as to what to expect coming up.
08:52Gavin, thanks again for joining us here on France 34.
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