TPT July 2018

G LOBA L MARKE T P L AC E

imports will have a negative effect on the competitiveness of the nation’s steelmakers. The White House has also rolled back the fuel-economy standards for cars instituted by former President Barack Obama. Such shortsighted policy measures can only reduce the competitiveness of local players over the long term. Addendum to Mr Kakigi’s remarks: › There is little doubt that the White House will persist in its effort to ease the fuel-efficiency rules for automobiles currently enforced by the US Environmental Protection Agency. But, with regard to Mr Kakigi’s last point, the plan to unravel the tougher Obama-era rules is not yet a fait accompli. According to a Senate official who reviewed the administration’s draft proposal and described it in detail to the Washington Post , it dictates freezing fuel-efficiency requirements at 2020 levels until 2026, scrapping current rules that would raise the standards repeatedly over the ensuing decade. Fuel-efficiency standards push automakers to produce and sell more vehicles that use less gasoline, an expedient to reduce conventional air pollution and greenhouse gas emissions. Mr Obama aimed to raise the average fuel economy of American automobiles to more than 50 miles per gallon by 2025.

from the new tariffs including Canada, Mexico and South Korea. Additionally, if US auto component makers request it, imported materials that are essential for their products and not replaceable with domestic alternatives will be exempted from the duties. Japanese steel products account for 5 per cent of US steel imports, many of which are non-replaceable items such as special types of wire rod. The global steel market totals 1.6 billion tons. Thus, in terms of volume the impact of the new trade policy of the US should be limited. On the other hand, if this protectionism spreads to other countries it could roil the global economy. South Korea escaped the burden of higher tariffs by voluntarily setting quotas for its steel exports to the US. Such bilateral “deals” would shake the principles of the free trade system, and the potential impact could be enormous. Q:  Could exports of Chinese steel increase again? A:  Fundamentally, the production glut in China has not been resolved. If the trade frictions with the US result in weaker domestic demand in China, Beijing may move to aggressively expand exports. For its part, the US could face higher domestic prices. In the end, US citizens will be the ones who will pay the cost of the higher tariffs. For the US steel industry, the measures to restrict

Dorothy Fabian, Features Editor (USA)

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JULY 2018