Talks sought to escape US tariffs

Talks sought to escape US tariffs

Officials to plead their case to Trump administration at April trade meeting

A customs officer inspects imported steel pipes. The government is seeking a way out of the imminent US tariffs on steel and aluminium.
A customs officer inspects imported steel pipes. The government is seeking a way out of the imminent US tariffs on steel and aluminium.

The government is set to negotiate with the Trump administration to find a way out of the US steel and aluminium tariffs and ease the negative impact on Thailand's exports of such materials.

Commerce Minister Sontirat Sontijirawong said yesterday after a joint meeting with steel companies and related officials that the government would pursue talks with the US and seek to exempt individual Thai-made steel and aluminium products from higher tariffs once the US Commerce Department announces details of the criteria and procedures for exemption.

In addition, officials will take the opportunity of the Thai-US meeting on the Trade and Investment Framework Agreement (Tifa), to be held next month, to ask the Trump administration for an exemption under Section 232 of the Trade Expansion Act of 1962, which gives the president the ability to issue tariffs based on national security concerns, for individual steel and aluminium products from Thailand.

"The Commerce Ministry is monitoring the impact of Section 232 and teaming up with the Thai private sector to handle the impact and protect the national interest," Mr Sontirat said. "The ministry's preliminary study has found that in the short term of one to three months after the US measures are implemented, Thai shipments are unlikely to see any harsh impact. More importantly, domestic steel prices have risen by about 30%, which will help offset the impact of higher tariffs on Thai products."

But Mr Sontirat acknowledged that in the longer term the Thai steel industry will inevitably be affected when US manufacturers successfully make adjustments and increase their production.

Unswayed by growing talk of a trade war, President Donald Trump on Thursday ordered steep new tariffs on steel and aluminium imports to the US, vowing to fight back against an "assault" by foreign competitors.

Nonetheless, the president said he would exempt Canada and Mexico as "special" cases while negotiating for changes to the North American Free Trade Agreement (Nafta).

The new tariffs will take effect in 15 days. Mr Trump suggested in an earlier meeting with his cabinet that Australia and "other countries" might be spared.

Those countries could try to negotiate their way out of the tariffs, he said, by ensuring that their trade actions don't harm the US's security.

According to a study of the Iron and Steel Institute of Thailand, Thailand is estimated to lose 10.47 billion baht or 383,496 tonnes of steel exports (notably for steel pipe, cold-rolled steel and galvanised steel sheet) as a direct consequence of the US tariffs.

For the indirect impact, the institute said Thailand is likely to encounter a flood of foreign steel, as the US tariffs are expected to redirect 27.03 million tonnes of steel into Asean markets.

Steel-making countries expected to rev up exports to Thailand include South Korea, Turkey, Japan, Taiwan, China, Russia, Vietnam and India, which account for a combined 40% of total steel exports to the US market.

Products likely to be dumped on the Thai market include steel rod, tin- and chromium-coated steel sheet, galvanised steel sheet and tin plate, which have no trade barriers here.

According to a source from the Commerce Ministry who asked not to be named, Mr Sontirat has entrusted Wanchai Varavithaya, deputy director-general of the Foreign Trade Department, to lead a negotiating team for talks with the US, evaluate the impact, find appropriate preventive measures and map out plans to prevent any further protectionist measures.

According to the source, Thailand has no upstream steel industry. The local industry tends to rely heavily on imported slabs to make cold-rolled and hot-rolled steel sheets, making Thai steel products less cost-competitive.

Mr Wanchai said recently that the government might opt for applying safeguard tariffs, anti-dumping measures or countervailing measures to guard against a flood of foreign steel if the planned US steel tariffs came into force.

The ministry's preliminary study found that the US steel tariffs would lower Thai steel exports to the US and possibly trigger a flood of foreign steel to Thailand from countries unable to access the US market.

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