Straya Trump tariff’s biggest loser?

Paul Kelly is horrified:

The true heart of Donald Trump is exposed. His protectionism is a threat to American workers, ­industry and exports, a betrayal of US leadership and guaranteed to provoke retaliation leading to possibly more serious global damage.

Malcolm Turnbull had no ­option but to attack protectionism and, by extension, repudiate Trump. This is the most dangerous step from Trump since his White House victory. Given Trump’s addiction as a dealmaker this opens wide scope for deals off the back of an extreme initial play.

The risk now in many nations, including Australia, will be a ­protectionist upsurge feeding populist demands that sees politicians buckle at the knees.

Chris Richardson aghast:

…modelling obtained by The Australian Financial Review by Deloitte Access Economics shows it would cost 20,000 jobs, wipe $5 billion off national income within a year, and derail a much-needed upswing in business investment.

Prime Minister Malcolm Turnbull, just over a week after personally pressing Mr Trump at the White House to honour a pledge last year to exempt Australian exporters such as BlueScope Steel, on Sunday lashed out at slide towards greater trade barriers.

“Protectionism is a dead end. It’s not a ladder to get you out of the low-growth trap. It’s a shovel to dig it much deeper,” Mr Turnbull said.

Jess Irvine is appalled:

Car, boat and plane manufacturers, medical device companies, canned goods and drinks producers and the building sector more broadly will have little choice but to pay the higher price and seek to pass on the higher cost to consumers.

American steel makers will be able to charge more for their products, enjoying higher margins and employing more workers.

But every other industry reliant on imports will be disadvantaged. And those industries combined employ far more Americans than the steel and aluminium sectors.

I am in favour of free trade too, sadly putting me in this company. But there are good reasons to think that at this stage it will be less egregious than the chorus of condemnation suggests:

• the steel tariffs will not impact China. President Obama already killed Chinese exports to the US (without the condemnation). Affected nations – mainly Brazil and Canada – can drop their prices to absorb the hit, steel prices and margins globally remain very high;
• there is little reason for other large economies to respond and if they have any sense they will give Trump this win and won’t;
• any displaced steel exports to the US will go somewhere else, placing downwards pressure on seaborne (and US) steel prices;
• in a period of chronic lowflation, it’s quite possible that tariffs will do bugger all to raise input costs and the net result might well be positive for American workers who get more jobs.

The biggest loser out of the tariffs is actually not steel at all, it is Straya. The seaborne iron ore sector will see a decent lump of up to 30mt of steel shift from dirt-fed blast output to scrap-fed EAF in the US. So that could displace up to 50mt of iron ore trade (and some goodly lump of coking coal). That will mean a drop of some sort in both prices.

Not only is Straya unlikely to be exempted from the steel tariffs, the real impact via dirt could be the largest of any nation thanks to our suicidal dependence upon bulk commodities.

Whose fault is that?