Donald Trump signs order imposing tariffs on steel and aluminium - but promises exemptions for 'real friends'

Foreign leaders have warned that the protectionist move could start a trade war

President Donald Trump has signed an order imposing sweeping new tariffs on steel and aluminium imports, despite an international outcry and warnings it could begin a trade war.

Prior to officially authorising the tariffs, Mr Trump promised to show “great flexibility and cooperation toward those that are real friends and treat us fairly on both trade and the military”.

After a week of intense lobbying from members of Congress – including members of Mr Trump’s own party – world leaders and other stakeholders, he has agreed to exempt Canada and Mexico from the tariffs.

He has also left open the possibility of later excluding allies such as Australia. But the order, which would go into effect in 15 days, could hit South Korea, China, Japan, Germany, Turkey and Brazil. The UK steel industry has said that tariffs would have a “profound impact” on their business and the British Prime Minister has voiced here concerns to Mr Trump about the move.

A spokesman said: “The [UK] Government has been clear that tariffs are not the right way to address the global problem of overcapacity, which requires a multilateral solution. We will work with EU partners to consider the scope for exemptions outlined today.”

However, Mr Trump’s words on flexibility towards “real friends” may be a suggestion that the country could be in line for exemptions alongside Canada and Mexico.

The signing ceremony for the proclamation issued at the White House was attended by several steel and aluminium workers, some of whom spoke of how excessive “dumping” of steel and aluminium imports had negatively affected their jobs and families.

“The actions we are taking today are not a matter of choice, they are a matter of necessity for our security”, Mr Trump said.

The President added that he was fulfilling a campaign promise by imposing the tariffs, asserting that support from steelworkers was part of the reason why he won the presidency.

American steel and aluminium workers have been betrayed, Mr Trump added, but “that betrayal is now over”.

Foreign leaders have warned that this move by the US could start a trade war. Both China and the EU said they would retaliate with their own import taxes against the US if Mr Trump implemented the tariffs.

US Commerce Secretary Wilbur Ross told CNBC that the broad tariffs are needed to counteract China’s transshipment of products.

“China has been very clever at transshipping products through other countries and dislodging domestic demand in other countries, which causes their producers to dump on us,” Mr Ross said. “So the reason we have to go on a broader basis is to deal with the problems of transshipment and the problems of displacement.”

But the decision to impose 25 per cent tariffs on steel and 10 per cent on aluminium will hurt poorer nations and could trigger takeovers in their mining industries, according to the head of the United Nation’s trade and development agency, Unctad.

“They are casualties of the process, but there is very little they can do right now, because developing countries, transition economies, least developed countries are incapable of retaliatory action against the US”, Unctad secretary general Mukhisa Kituyi told Reuters in Geneva.

Many top Republicans disagree with the President’s tariffs, including House Speaker Paul Ryan. The decision cost Mr Trump his top economic adviser, Gary Cohn, whose free trade views clashed with the protectionist move.

In a statement immediately following Mr Trump’s formal proclamation of the tariffs, Mr Ryan said he would “continue to urge the administration to narrow this policy so that it is focused only on those countries and practices that violate trade law”.

“I am pleased that the President has listened to those who share my concerns and included an exemption for some American allies, but it should go further,” he said. “There are unquestionably bad trade practices by nations like China, but the better approach is targeted enforcement against those practices. Our economy and our national security are strengthened by fostering free trade with our allies and promoting the rule of law.”

Republican Senator Jeff Flake has already introduced legislation to nullify the tariffs.

“Trade wars are not won, they are only lost,” said Mr Flake, who last year announced that he would not seek re-election in 2018, meaning he is less susceptible to the President’s frequent attacks than most.

“Congress cannot be complicit as the administration courts economic disaster,” the Arizona senator added.

Right now it is unlikely that the Republican-led Congress can muster up enough votes to block Mr Trump.

While cautiously praising Mr Trump’s new tariffs, the House of Representatives’ top legislator on tax issues said they should be narrowed.

“Exempting Canada and Mexico is a good first step, and I urge the White House to go further to narrow these tariffs so they hit the intended targets – and not US workers, businesses, and families,” House Ways and Committee Chairman Kevin Brady, who is a Republican, said in a statement. “As America’s economy and trading partners react to these new taxes, Congress – which has constitutional authority over trade with foreign nations – will continue to be actively engaged with the administration.”

Mr Brady and more than 100 House Republicans urged Mr Trump on Wednesday to use narrowly focused tariffs to take action against China and other countries instead of across-the-board measures.