Trump Promises to be More Flexible over Trade Tariffs
Strong actions come from within and outside the United States. Vice President Jusuf Kalla says Indonesia is strong enough to contain any US policy that may harm Indonesia\'s trade.
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·5 minutes read
REUTERS/Leah Millis
U.S. President Donald Trump is after signing a proclamation to establish tariffs on imports of steel and aluminum at the White House in Washington, U.S., March 8, 2018.
WASHINGTON, THURSDAY – US President Donald Trump looks to have softened over his plan to impose tariffs on steel and aluminum imports. Trump promised on Thursday to be flexible and would be ready to cooperate with US’s "true friends".
Trump is expected to sign a regulation that will impose a 25 percent tariff on steel imports and 10 percent for aluminum imports on Friday. Through his Twitter account, Trump announced that he would hold a meeting regarding the matter at 3.30 p.m. local time, or at 03:30 a.m. on Friday, Western Indonesia time (WIB).
Trump did not say whether he would sign the import tariff regulation at the meeting. "We have to protect and build steel and aluminum industries, while at the same time be very flexible and ready to work with those who are true friends and fair to us in trade and the military," Trump tweeted.
He did not explain which countries he referred as "friends". However, he once said his tariff policy would counter cheap imports, especially from China, which disrupted US industries and employment.
US Secretary of Commerce Wilbur Ross said the US did not want a trade war. "We will deal wisely with our allies. He [Trump] shows flexibility. We\'re not trying to blow up the world," he said.
In fact, the president’s economic advisor Peter Navarro said there would be exceptions for Canada and Mexico. Previously, Trump claimed he would not give any exceptions to the plan to impose tariffs on steel and aluminum imports.
The softening of his attitude came after strong reactions from inside and outside the country. In the country, the strong reaction came from Gary Cohn. Trump’s economic adviser resigned because he disagreed with Trump\'s policy on import tariffs. Cohn\'s resignation triggered the fall of US stock prices. "There is a lot of concern among Republican senators that the issue will enlarge into a trade war," said Mitch McConnell, the Senate majority leader.
In fact, 107 members of the US House of Representatives, opposed the tariff plan. "We urge you to reconsider the idea of raising tariffs to avoid undesirable adverse effects on the economy and US workers," they wrote in a letter to Trump.
US businessmen also warned of the potential fallout from the US economy due to the tariff. The direction could endanger the economy.
Outside the US, the European Union says it is ready to retaliate by imposing tariffs on imported products from the constituent areas of Trump and his supporters in the US. "I want Congress to understand that all will become losers in this situation," Pierre Moscovici, the commissioner for European Financial Affairs, told BFM TV.
The EU is the largest US trading partner after China. They recorded the largest trade surplus with the US.
Reaction from Indonesia
In Jakarta, Vice President Jusuf Kalla said Indonesia has a strong bargaining position should a US policy disrupt trade with Indonesia. "If [the import tariff policy] be expanded, say to the palm oil, of course we have to react. Instead, we can shift imports of soybean, wheat, Boeing [from the US to other countries]," he said.
However, he added, until now the US policy has yet to impact Indonesia because the country did not export much steel and aluminum to the US.
Previously, several Indonesian economists, estimated that the US’ protection measure could indirectly affect the export volume of Indonesia\'s coal and crude oil to steel and aluminum producing countries, especially China (Kompas, 8/3).
The decline in production in these countries will reduce the demand for commodities and energy from Indonesia, they said.
Crude oil prices fell following the announcement of the US’ controversial trade policy. If it continues, it is feared that the price of Indonesia’s crude palm oil (CPO) will also decline.
Currently, Indonesia is still in dispute with the US over the implementation of anti-subsidized import duties and anti-dumping duties on several Indonesian biodiesel products.
The Trade Ministry said the government and Indonesian biodiesel producers had formally filed a protest over the dumping and subsidy allegations in the US International Trade Court (USITC). They also prepared to file a similar protest through the World Trade Organization.
Reaction from other countries
In a reaction to the US aluminum import tariff plans, China Foreign Minister Wang Yi warned that everybody would suffer if Trump’s policy triggered a trade war. "Choosing a trade war is the wrong [move]. Ultimately, you will hurt yourself and others. China will certainly respond," he said.
China\'s steel and aluminum exports to the US are not so large. The portion is only a few percent in the trade balance of both countries. However, the imposition of import tariffs on these two commodities is feared to trigger a trade war between the US and China.
German auto company Continental publicly expressed concern over the tariff. "We are not happy with US policy and its impact on the world," said Continental’s financial director Wolfgang Schaefer.
About 25 percent of the company\'s market share is North America. The company sells vehicle parts and tires to the country.
