(Bloomberg) –If there were any hope President Joe Biden would undo his predecessor’s divisive trade tariffs that caused upheaval in the global steel and aluminum markets, it all but evaporated last week.
The US Trade Representative issued a strong rebuke of the World Trade Organization’s decision that former President Donald Trump’s 25% tariffs on steel imports and 10% duty on aluminum violates international rules. It’s the strongest statement yet from the White House that Biden has no intention to remove the duties, which would potentially alienate one of his most important bases of support: steelworkers.
“The Biden Administration is committed to preserving U.S. national security by ensuring the long-term viability of our steel and aluminum industries, and we do not intend to remove the Section 232 duties as a result of these disputes”, Adam Hodge, a spokesman for the US Trade Representative, said in a statement.
There was much discussion in the leadup to the 2020 election and the early days of Biden’s presidency whether he would roll back the tariffs, which manufacturers from Caterpillar Inc. to Whirlpool Corp. to Harley Davidson Inc. had long complained were hurting US companies. The president instead chose to make some soft concessions to key allies, such as the European Union, while keeping the Section 232 tariffs, which the US sees as vital for national security, in place for most others.
Two industry insiders familiar with the matter said the USTR’s stance on the ruling gives them certainty the president won’t roll back the Section 232 tariffs. The metals industry already was taking a victory lap with US Steel Corp. commending Biden for defending the industry and the United Steelworkers calling the WTO’s decision “just plain wrong.”
The US rebuke still leaves the door open for the president to tinker with the duties but not in a way that will fundamentally change the landscape. The administration’s defense of the tariffs comes as it studies ways to use similar, untested measures to isolate China and boost its climate credibility.
“Legally, they’re correct. The WTO cannot declare that a US law is invalid. All they can do is impose sanctions for not changing it,” said Lewis Leibowitz, a trade lawyer who has long represented companies that opposed the tariffs. “But I think they were a mistake and they’re creating disincentives for manufacturing and eventually it’s going to hurt the sector.”
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